HomeMy WebLinkAbout90-93 RESOLUTION•
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RESOLUTION NO. 90-93
A RESOLUTION AUTHORIZING THE MAYOR AND CITY
CLERK TO EXECUTE A CONTRACT IN THE AMOUNT OF
$48,000 FOR 1993 WITH THE ARTHUR ANDERSON &
COMPANY TO PERFORM ANNUAL AUDITS FOR THE CITY
OF FAYETTEVIT.1 E.
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BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
S. That the Mayor and City Clerk are hereby authorized to execute a contract
m the amount of $48,000 for 1993 with the Arthur Anderson & Company to perform annual
audits for the City of Fayetteville. A copy of the contract is attached hereto marked Exhibit "A"
and made a part hereof
PASSED AND APPROVED this jui. day of September , 1993.
ATTEST:
BY:.f tea)
S IL. Thomas, City Clerk
gm
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air
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CONTRACT r/T�
CONTRACT executed this /,2 day of
, 1993, by and between the City of
Fagetteville, Arkansas, herein -after called the "City" and Arthur
Andersen, Certified Public Accountants, hereinafter called the
"Accountants".
WHEREAS, the City has issued a Request for Proposal for
independent audit dated June 20, 1993, a copy of which is attached
hereto marked Exhibit "A" and made a part hereof; and
WHEREAS, the Accountant has submitted a proposal to provide
such professional services dated July 26, 1993, a copy of which is
attached hereto marked Exhibit "B" and made a part hereof; and
WHEREAS, the Accountant submitted a job arrangement letter
dated August 20, 1993, a copy of which is attached hereto marked
Exhibit "C" and made a part hereof.
NOW, THEREFORE, the City and Accountant hereby mutually
agree:
1. The Accountant shall provide the City with the necessary
professional services to audit all funds which are included under
the provisions of the Single Audit Act of 1984.
2. The term of the contract shall run from the date of
execution until the 31st day of December, 1993, and shall
automatically renew each year, subject to budget approval, for such
terms as are required to perform the contracted professional
auditing services for the fiscal years ending December 31, 1993 to
December 31, 1996.
3. The professional accounting services shall be provided
in accordance with the terms and conditions set forth in the
Request for Proposal attached hereto marked Exhibit "A" and in the
Proposal attached hereto marked Exhibit "B".
4. The Accountant shall be
under this contract in accordance
forth in Exhibit "A" and Exhibit
compensated for services rendered
with the terms and conditions set
"C" attached hereto.
5. The City or the Accountant shall have the right to
terminate the contract upon 30 day written notice.
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Page 2
Contract: Arthur Anderson
and City of Fayetteville, AR
September 7, 1993
IN WITNESS WHEREOF, the parties have executed this contract
on the date first above written.
ATTEST
By:
ATTEST
By:
Title:
CITY OF YET �'EV�ARKANSAS
By:
or
ARTHUR
By:
Title:
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AGENDA REQUEST
X CONTRACT REVIEW
GRANT REVIEW
STAFF REVIEW FORM
For the Fayetteville City Council meeting of N/A
Ru 10-13
e d 1
FROII:
Marilyn Cramer
Name
Accounting and Audit Administrative Services
Division Department
ACTION REQIIIRED:
Approval is reouested for amelr±rent #1 to the contract with Arthur Andersen and Cerrany.
COST TO CITY:
15,000.00
Cost of this Request
1010-6600-5314-79
Account Number
Project Number
Category/Project Budget Category/Project Name
$
Funds Used To Date Program Name
Remaining Balance Fund
BUDGET REVIEW: _ Budgeted Item _ Budget Adjustment Attached
Budget Sbor napbr
Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW:
AI
A. . mtn/ ego
Ace. a -r
o
i;ANL
Ott, k
GRANTING GENCY:
titividC1
Date InlJernal Auditor Date
Date ADA Coordinator
4-a9 9�
Purchasing Officer Date
Date
STAFF RECiDATION:
Division H d Date Cross Reference
Department Director Date
4-2916
Administra ve Se iii s Director Date
446
Mayor Date
New Item. Yes No
Prey Ord/Res • : Res 1°' 13
Orig Contract Date:
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FAYETTEVILLE
NE CITU OF FAYETTEVILLE. ARKANSAS
DEPARTMENTAL CORRESPONDENCE
To:
Through:
From:
Fred B. Hanna, Mayor
Ben R. Mayes, Administrative Services Director VAN -
Marilyn J. Cramer, Accounting Manager
Date: April 24, 1996
Subject: Amendment to the contract with Arthur Andersen & Company
Attached for your review and approval is amendment # 1 to the contract
& Company to provide auditing services to the City.
The mcinerator disengagement and subsequent lawsuits have necessitated
addition to the normal services associated with the annual audit.
with Arthur Andersen
accounting services in
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AMENDMENT TO THE
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AGREEMENT WITHArthur Andersen & Company
AMENDMENT i 1
This is an amendment to the Agreement for
auditing services
executed on the 7th day of September 19 93between the City of
Fayetteville,Arkansas and Arthur Andersen & Company
Additional services required due to
accounting work related to the
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incinerator disengagement and subsequent lawsuits.
The charge for the additional services shall not exceed
$ 15,000.00
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CITY OF FAYETTEVILLE:
/SP14A---
Mayor
see attached
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Company
Title
Date
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Date
FOR OFFICE USE ONLY
Existing P.O. #
Contract #
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FAYETTEVILLE
THE CITY OF FAYETTEVILE, ARKANSAS
DEPARTMENTAL CORRESPONDENCE
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To: Traci Paul, City Clerk
From: Marilyn J. Cramer, Accounting Manager r )
Date: October 14, 1996
Subject: Amendment #1, Arthur Andersen contract
Invoice number 712261, a copy of which is attached, is for auditing services performed pursuant
to Amendment #1 to the contract with Arthur Andersen and Company dated September 7, 1993.
The invoice is accepted in lieu of the signature by Arthur Andersen and Company.
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ARTHUR
ANDERSEN
September 30,1996
Mr. Ben Mayes
City of Fayetteville
113 West Mountain
Fayetteville, Arkansas 72701
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Arthur Andersen LLP
Suite 5600
901 Main Street
Dallas 1X 75202-3799
214 7418300
Dear Ben:
Attached is our billing for professional services rendered regarding evaluation of
accounting and financial reporting relating to the Northwest Arkansas Resource
Recovery Authority.
We appreciate the opportunity to be of service to you and the City of
Fayetteville. Please reference our billing #712261 on your check when remitting
payment. If you have any questions, please do not hesitate to call me.
Very truly yours,
ARTHUR ANDERSEN LLP
By
Ben D. Kohnle
PST
Attachment
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ARTHUR
ANDERSEN
September 30,1996
REMITTANCE
COPY
STRICTLY CONFIDENTIAL
City of Fayetteville
113 West Mountain
Fayetteville, Arkansas 72701
Billing for professional services rendered regarding
evaluation of accounting and financial reporting
relating to the Northwest Arkansas Resource
Recovery Authority
Remit payments to:
Arthur Andersen LLP
P.O. Box 730201
Dallas, Texas 75373-0201
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Arthur Andersen LLP
Suite 5600
901 Main Street
Dallas TX 75202-3799
214 7418300
(214) 741-8223
DUE UPON RECEIPT
INVOICE #712261
$14,700
To ensure proper credit to your account, please return the
enclosed remittance copy with your check and include the
invoice number on the check.
Federal Tax Identification Number 36-0732690
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Scotcna 7664 "Postal" Routing -Request Pad
ROUTING - REQUEST
Please
READ
C,eL HANDLE
APPROVE
and
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FORWARD
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KEEP OR DISCARD
REVIEW WITH ME
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AGENDA REQUEST
XXX CONTRACT REVIEW
GRANT REVIEW
For the Fayetteville City
STAFF REVIEW FORM
Council meeting of
N/A
7-`
FROM:
B. R. Mayes
Name
Admin Sevices Dir
Division
Admin Services
Department
ACTION REQUIRED:
Approve annual renewal of audit contract with Arthur Andersen for the 1996
audit.
COST TO CITY:
$ 53,000
Cost of this Request
Account Number
Project Number
$Various Accts & Funds
Category/Project Budget
Funds Used To Date
Remaining Balance
Category/Project Name
Program Name
Fund
BUDGET REVIEW:
XX Budgeted Item
Budget Coordinator
Budget Adjustment Attached
Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW:
Accountin
Cit Attorney
v ,:ALQ
Purchasing Officer
GRANTING AGENCY:
/4-/7-46
Date AD* Coordinator Date
IES 96 (/��a/nda iu.Q(�i 42-'7 -9 1
Date In ijrnal Auditor
is -n-96
Date
Date
STAFF RECOMMENDATION:
Division Head
Department Dior
Adminiss/rative Services Director
/ 1
May
Date
Date
Date
Date
Cross Reference
New Item: Yes No
Prey Ord/Res #:
Orig Contract Date:
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ARTHUR
ANDERSEN
November 20, 1996
To The Honorable Mayor and City Council of the
City of Fayetteville, Arkansas:
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Kkt;cl v c...
DEC 061996
FRANCE DEP1.
Arthur Andersen LLI'
Suite 5600
901 Main Street
Dallas TX 75202-3799
214 741 8300
This letter will confirm our understanding of the arrangements made with Ben Mayes,
Administrative Services Director, covering the audit you wish us to perform of the
combined Balance Sheet of the City of Fayetteville as of December 31, 1996, and the related
combined Statement of Revenues, Expenditures, and Changes in Fund Balances, the
combined Statement of Revenues, Expenses and changes in Retained Earnings, and the
combined Statement of Cash Flows - all Proprietary Fund Types and the Single Audit for
the City of Fayetteville for the year ended December 31, 1996.
Upon completion of our audit, we will provide you with our auditors' reports on the
financial statements and Single Audit referred to above, and bring to your attention any
material errors, and any irregularities or illegal acts of which we become aware during our
audit.
Audit Responsibilities and Limitations
We will conduct our audit in accordance with generally accepted auditing standards, the
standards for financial audits contained in Government Auditing Standards (1994 revision),
issued by the Comptroller General of the United States (the "Yellow Book"), the Single Audit
Act and the provisions of OMB Circular A428, Audits of State and Local Governments.
Reference is made to the enclosed Attachment I which further describes our responsibilities
under generally accepted auditing standards and explains our additional responsibilities
under the Yellow Book, the Single Audit Act and the provisions of A-128. Accordingly, we
will examine, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assess the accounting principles used and significant estimates made
by management, and evaluate the overall financial statement presentation.
As part of our audit, we will consider, solely for the purpose of determining the nature,
tinting and extent of our audit procedures, the City's internal control structure. This
consideration will not be sufficient to enable us to render a separate opinion on the
effectiveness of the internal control structure over financial reporting.
The objective of our audit is to obtain reasonable assurance about whether the financial
statements are free of material errors or irregularities. While an effective internal control
structure reduces the likelihood that errors or irregularities (including misappropriation of
assets), may occur and remain undetected, it does not eliminate that possibility. For that
reason, and because we use selective testing in our audit, we cannot guarantee that material
errors or irregularities, if present, will be detected.
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ARTHUR
DERSEN
To The Honorable Mayor and
City Council of the
City of Fayetteville, Arkansas
November 20, 1996
Page 2
The working papers prepared in conjunction with our audit are the property of our firm,
constitute confidential information and will be retained by us in accordance with our firm's
policies and procedures
Management's Responsibilities and Representations
The financial statements referred to above are the responsibility of the management of the
City. In this regard, management is responsible for properly recording transactions in the
accounting records and maintaining an internal control structure sufficient to permit the
preparation of reliable financial statements and ensuring the entity's compliance with
applicable laws, regulations, contracts and grants Management is also responsible for
making available to us, upon request, all of the City's original accounting records and
related information, and personnel to whom we may direct inquiries.
As required by generally accepted auditing standards, we will make specific inquiries of
management and others about the representations embodied in the financial statements, the
effectiveness of the internal control structure, and compliance with laws, regulations,
contracts and grants Generally accepted auditing standards also require that we obtain a
representation letter covering the financial statements and compliance from certain
members of management. The results of our audit tests, the responses to our inquiries, and
the written representations comprise the evidential matter we intend to rely upon in
forming an opinion on the financial statements and rendering our other reports. Because of
the importance of management's representations to an effective audit, the City of
Fayetteville agrees to release Arthur Andersen LLP and its personnel from any liability and
costs relating to our services under this letter attributable to any misrepresentations by
management.
If you intend to publish or otherwise reproduce the financial statements together with our
report (or otherwise make reference to our firm) in a document that contains other
information, you agree to (a) provide us with a draft of the document to read, and (b) obtain
our approval for inclusion of our report, before it is printed and distributed.
Other Services
Any additional services that you may request, and that we agree to provide, will be the
subject of separate written arrangements.
Fees and Billing Arrangements
Our charges for the services referred to above will be $53,000 ($43,000 for the CAFR and
$10,000 for the Single Audit) Billings for our services will be rendered as the work
progresses (See Attachment III). The audit fees contemplate that the City will provide
assistance in connection with the audit as follows:
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ARTHUR
ANDERSEN
To The Honorable Mayor and
City Council of the
City of Fayetteville, Arkansas
November 20, 1996
Page 3
1. Adhere to agreed upon timetable to be mutually agreed upon between the City and
Arthur Andersen.
2. Prepare trial balances for all funds, including posting of closing adjustments.
3. Prepare audit schedules, as agreed, and determine such schedules agree with the
general ledger.
4. Prepare and print the Comprehensive Annual Financial Report, including related
footnotes and schedules, and provide support for all footnote disclosures and
schedules.
5. Prepare the schedule of federal and state financial assistance, including related
footnotes, and provide support for all footnote disclosures
6. Analyze and explain variations in selected account balances between years and/ or from
budget, as identified by Arthur Andersen.
7. Prepare appropriate year-end accruals.
8. Provide copies of executed legal documents supporting significant current year
transactions, i.e., bond sales, lawsuit settlements, etc.
9. Provide timely resolution of exceptions or questioned costs as identified during the
course of the audit.
10. Completion of GFOA checklist, as appropriate, to ensure compliance with GFOA
Certificate program.
The above discussion of responsibilities has been included in an effort to provide maximum
client service at minimum cost to the City. In the event the City is unable to either complete
the procedures outlined or to complete them on schedule, Arthur Andersen is authorized to
request an adjustment in fees and/or completion dates.
As part of our continuing commitment to the City, we extend an offer to the City to send up
to three people per year to pertinent training courses.
In addition, we understand that the City may require us to perform certain procedures
which are beyond the scope of our engagement. Although not a part of this specific
arrangement, we are available to assist the City in such other audit -related areas. Such areas
might include loan staff assistance in completing the City's responsibilities under these
arrangements, assistance in the preparation of Official Statements as contemplated by the
"Disclosure Guidelines for State and Local Governments" issued by the Government
Financial Officers Association, special reviews of selected areas, and/or provide the City
with grant accounting or other technical assistance in connection with the audit.
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ARTHUR
DERSEN
To The Honorable Mayor and
City Council of the
City of Fayetteville, Arkansas
November 20, 1996
Page 4
Arthur Andersen LLP's maximum liability to the City of Fayetteville for any reason relating
to the services under this letter shall be limited to the fees paid to Andersen for the services
or work product giving rise to liability, except to the extent finally determined to have
resulted from thenegligence or willful misconduct of Andersen.
SONN
Acknowledgment
Please confirm your agreement with the above terms by signing a copy of this letter and
returning it in the enclosed self-addressed envelope.
We are pleased to have this opportunity to serve you and assure you that this engagement
will be given our close attention. Should you have any questions about this letter, please do
not hesitate to contact Calvin Webb at (214) 741-8718 or Ben Kohnle at (214) 741-8736.
Very truly yours,
gad", GUS
Agreed t• . d Ac .wledged by:
Fred anna, Mayor
214,
Date
Ben Mayes, AdmihZs native Services Director Date
Attachment
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Attachment I
Description of Independent Public Accountant's Responsibilities Under Generally Accepted
Auditing Standards, Government Auditing Standards and the Single Audit Act
INTERNAL CONTROL STRUCTURE
Responsibility under Generally Accepted Auditing Standards (GAAS).
We will obtain an understanding of the internal control structure. Based on this understanding
we assess control risk - the risk that a material misstatement could occur in the financial
statements that will not be prevented or detected on a timely basis by the City's internal control
structure. Based on our understanding of the internal control structure and the assessed level
of control risk, we will determine the nature, timing and extent of our audit procedures
The procedures we perforin under GAAS do not provide sufficient evidence to enable us to
express an opinion or any other assurance relative to the internal control structure's design or
effectiveness. The purpose of our consideration of the internal control structure is to plan the
audit and to determine the nature, timing and extent of the substantive tests necessary to
enable us to form an opinion as to the fair presentation of the City's financial statements.
Responsibility under Government Auditing Standards
Government Auditing Standards does not require us to perform any procedures with respect to
the internal control structure beyond those required by GAAS. However, we are required to
issue a written report (either as a part of our report on the financial statements or separately)
on our consideration of the internal control structure. Our report must disclose reportable
conditions and material weaknesses, if any, we identify as a result of the procedures we
performed. The report does not provide any assurance on the internal control structure's
design or effectiveness.
Responsibility under the Single Audit Act and Circular A-128
In addition to the procedures performed to meet GAAS and Government Auditing Standards
requirements, the Single Audit Act and Circular A-128 require that we specifically consider the
internal control structure over federal financial assistance programs and perform tests of those
controls. The test of controls must cover the controls used to administer at least 50% of the
expenditures under all federal financial assistance programs. We are required to issue a report
(in addition to the report required by Government Auditing Standards) on our consideration of
the internal control structure over federal financial assistance programs, including tests of those
controls. Our report must disclose any reportable conditions and material weaknesses we
identify as a result of the procedures we performed. This report does not provide any
assurance on the design or the effectiveness of the internal control structure used to administer
federal financial assistance programs.
Additional services available.
While the work described above is not intended to result in the expression of assurance or an
opinion on the design and operating effectiveness of the internal control structure, you could
engage us to perform agreed-upon procedures or examine and report on a written assertion
from the City's management as to the design and, if desired, the operating effectiveness of the
internal control structure or a segment of that structure. The examination would be conducted
in accordance with AICPA standards for attestation engagements.
COMPLIANCE WITH LAWS AND REGULATIONS
Responsibility under GAAS.
We are required to design the audit to provide reasonable assurance of detecting errors and
irregularities material to the financial statements, and illegal acts with a direct and material
effect on financial statement amounts.
With respect to illegal acts that could have a material indirect effect on the financial statements,
if information comes to our attention that provides evidence of the existence of possible indirect
effect illegal acts, we must apply procedures directed to ascertaining whether an illegal act has
occurred. The results of these procedures are considered by us in forming an opinion on the
financial statements.
Responsibility under Government Auditing Standards.
In addition to the responsibilities under GAAS, we are required to design the audit to provide
reasonable assurance of detecting material misstatements resulting from noncompliance with
provisions of contract or grant agreements with a direct and material effect on the determination
of financial statement amounts. Government Auditing Standards requires that if specific
information comes to our attention providing evidence of possible noncompliance that could
have a material indirect effect on the financial statements, we must apply audit procedures
directed to ascertaining whether that noncompliance has occurred.
We are required to issue a written report, separately or as a part of the report on the financial
statements, on the results of the procedures performed with respect to compliance with
applicable laws and regulations.
Responsibility under the Single Audit Act and CircularA-128.
In addition to the requirements of GAAS and Government Auditing Standards, the Single Audit
Act and Circular A-128 require auditors to perform procedures sufficient to provide positive
and negative assurance on the general requirements and to perform procedures to provide
sufficient evidence to express an opinion as to whether the City has administered its major
federal financial assistance programs in compliance with applicable laws and regulations.
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For fiscal year 1996, the City anticipates four major programs as listed below:
Grantor
Federal -
U. S. Department of Housing and
Urban Development
U. S. Department of Housing and
Urban Development
U. S. Department of Transportation
State -
Arkansas Industrial Development
Corporation
CFDA/Grant
Number
14.218
14.239
20.106
Program
Community Development Block
Grant
Home Grant
Airport Improvement Program
EIF-9302 Industrial Park Grant
We will perform procedures sufficient to express an opinion as to whether the programs have
been administered in compliance with applicable laws and regulations.
Additional services available.
We could also render the following additional services regarding compliance:
• Financial statements.
If the City asserts it complied, in all material respects, with specified laws and regulations,
we could perform agreed-upon procedures or an examination engagement in accordance
with AICPA attestation standards. The procedures we will perform, as required by GAAS
and Government Auditing Standards, are more limited than if we were to express an opinion
on management's assertion.
• Federal financial assistance.
The City has other federal financial assistance programs, which are considered nonmajor.
Neither the Single Audit Act nor Circular A-128 requires us to perform procedures to
determine whether that program has been administered in compliance with applicable laws
and regulations. However, we could perform additional procedures that would enable us
to determine if the City has administered the program in accordance with applicable laws
and regulations. If we perform those procedures, we would issue a report expressing our
opinion as to that program's compliance with laws and regulations.
ISBNs
City of Fayetteville,
Arkansas
Price Proposal
Contact:
Calvin E. Webb 11
901 Main Street
Dallas, Texas 75202
(214) 741-8718
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Arthur
Andersen
Proposal to
Provide
Professional
Services
July 1993
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CITY OF FAYETTEVILLE
Price proposal to provide professional services
CITY OF FAYETTEVILLE
ARTHUR ANDERSEN & CO.
901 MAIN STREET
SUITE 5600
DALLAS, TEXAS 75202
PLEASE CONTACT CALVIN E. WEBB II AT (214) 741-8718
ARTHUR ANDERSEN
JULY 1993
CITY OF FAYETTEVILLE
PRICE PROPOSAL FOR CITY OF FAYETTEVILLE
We recognize that you must closely monitor the costs and expenses
associated with annual financial audits. Our insistence on proper planning
and control of each engagement keeps our fees to a minimum, so you can
be assured that our fees will be competitive in relation to the services
provided. Based on our experience and discussions with the City, we
estimate the all-inclusive maximum price, including out-of-pocket
expenses for the December 31, 1993 through 1996 audits to be as follows:
F�
Audit:
CAFR, Single Audit, Management Letter $48,000
First -Time Through Work - 0 -
Assistance in Meeting Requirements of GFOA Program -0-
Training Provided to Your Staff -0-
1993 $ 48.E
1994
$49.300
1995
$51,600
1996
$53,000
ARTHUR ANDERSEN
PAGE 1
a
CITY OF FAYETTEVILLE
APPENDIX A
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR THE AUDIT OF THE 1993 FINANCIAL STATEMENTS
Standard Quoted
Hourly Hourly
Hours Rates Rates Total
Engagement Partner 100 - 120 $280- 335 $150 - 200 $16,000
Manager 155 -185 200- 250 100 - 150 15,000
Seniors and staff
accountants 745 —895 75 —180 50 -100 41,000
Subtotal 72,000
Less — Additional Investment for First -Time Through Review (24,000)
Total $48,000
ARTHUR ANDERSEN
PAGE 2
CITY OF FAYETTEVILLE
We would expect the related fees for years subsequent to 1993 to be the
same, except for inflation adjustments and significant changes in
operations. Included in the fees are periodic consultations and attendance
at City Council meetings. We feel strongly that in order to facilitate open
and frequent communications, management must have access to their
engagement team without fearing an additional billing for each
consultation or discussion. Of course, our resources are available for
special project needs at the City, including potential reengineering of
accounting department functions, performance of arbitrage rebate
calculations, specific internal control reviews, efficiency and profit
improvement studies, compensation and benefits reviews, and
consultations.
These estimates assume that the same level of assistance provided in prior
years by the City for the preparation of all necessary year-end closing
entries and audit workpapers, and the assistance from Internal Audit, will
continue to be provided in the current and future years.
The estimated fee information, provided at your request, is intended to
show the order or magnitude of possible fees; however, in accordance with
the requirements of the Texas State Board of Public Accountancy, it is not
intended as a binding offer.
We have a reputation for making firm price quotes and getting our work
completed within a specified timeframe and at a specified price. If this fee
estimate is inconsistent with your prior experience or expectations, we
would welcome the opportunity to discuss it with you.
ARTeux ANDERSEN
PACE 3
CITY OF FAYETTEVILLE
Supplemental Professional Services
We recognize that budget constraints frequently prevent an organization
from addressing areas which need attention. Therefore, we are willing to
provide, as part of the audit and at no cost to the City, additional
professional services of $2,000 per year for each year of the four year
contract. These services can be provided in any mutually agreeable area,
such as:
• Arbitrage rebate calculations • Assistance in developing formal
• Reengineering of accounting Davis -Bacon monitoring
department functions procedures
• Productivity and efficiency • Computer systems consultation
reviews • Review of accounting controls
• Assistance in improving fixed • Strategic planning
asset records • Loan staff assistance
Training Courses
As previously mentioned, as part of our commitment to the City, we
extend an offer to allow the City to send up to three people per year to our
governmental training courses in Dallas at no cost for the course.
First -Time Through Work
It is our policy to absorb the start-up cost involved in familiarizing
ourselves with the operations, systems, procedures and policies, and
analyzing and verifying certain historical data.
Manner of Payment
We anticipate that the City will make payments as the work progresses,
that interim billings shall cover a period of no less than one month, and
that 25% will be withheld from each billing pending delivery of final
reports. Progress billings will be itemized based on number of hours spent
on each fund.
r.�I; ._.1• 7 s
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ARTHUR
ANDERSEN
ARTHUR ANDERSEN&CO Sc
Arthur Andersen & Co.
Suite 5600
August 16,1993
901 Main Street
To The Honorable Mayor and City Council of the Dallas 8300
75202-3799
y 214 ,4] 8300
City of Fayetteville, Arkansas:
This letter will confirm our understanding of the arrangements made with Yolanda Perez
covering the audit you wish us to make of the financial statements of the City of Fayetteville,
Arkansas, for the years ending December 31, 1993-1996.
Our work is to consist of an audit, to be performed in accordance with generally accepted auditing
standards, Government Auditing Standards, issued by the Comptroller General of the United
States, the Single Audit Act of 1984 and the provisions of OMB Circular A-128, Audits of State and
Local Governments, of the general purpose financial statements of the City of Fayetteville as of
December 31,1993-1996, and for the years then ending. Also, in accordance with Arkansas state
statutes, we will perform an audit of compliance with the various provisions as required by Section
14-58-101 of the Arkansas Code Annotated of 1989. Upon completion of our audit, we will provide
you with our report covering these financial statements. Our opinion on the combined financial
statements is to be included in the City's comprehensive annual financial report only and is not to
be reproduced in any official statements or documents without prior notification to us.
As part of our audit, we will consider, solely for the purpose of determining the nature, timing
and extent of our audit procedures, the City's internal control structure elements (i.e., its control
environment, accounting system and control techniques). This consideration will not entail a
detailed study and evaluation of any of these elements for the purpose of providing assurances
thereon. However, any significant matters relating to the internal control structure noted during
our audit will be communicated to you along with our comments and suggestions on these and
other business matters.
An effective internal control structure reduces the likelihood that errors or irregularities will
occur and remain undetected; however, it does not eliminate that possibility. Accordingly,
while we cannot guarantee that errors or irregularities, if present, will be detected, we will
design our audit to provide reasonable assurance of detecting errors or irregularities that would
have a material effect on the financial statements.
Our charges for the work described above are outlined in the price proposal (Exhibit B to this
contract). These fees contemplate that the City will provide assistance in connection with the
audit as follows:
a) Adhere to agreed upon timetable.
b) Prepare trial balances of all funds, including preparation of appropriate yearend
accruals and posting of dosing adjustments.
• ARTHUR
ANDERSEN
ARTHUR ANDERSEN & Co SC
To the Honorable Mayor of the
City of Fayetteville, Arkansas
Page 2
August 16, 1993
c) Prepare audit schedules, as agreed, and determine such schedules agree with the
general ledger.
d) Prepare, proof, and print the financial statements, including related footnotes, and
provide support for all footnote disclosures.
e) Prepare walkforward of fund balances from prior year.
f) Provide copies of executed legal documents supporting significant current year
transactions (i.e., bond sales, lawsuit settlements, etc.)
g) Analyze and explain variations in selected account balances between years and/or from
budget, as identified by Arthur Andersen & Co.
h) Provide timely resolution of exceptions or questioned items as identified during the
course of the audit.
i) Assist in the completion of GFOA checklist, including addressing prior year GFOA
comments and drafting of new CAFR sections, as appropriate.
j) Copying and binding of Comprehensive Annual Financial Reports.
The above discussion of responsibilities has been included in an effort to provide maximum
client service at minimum cost to the City. In the event the City is unable to either complete the
procedures outlined or to complete them on schedule, it will be necessary to adjust the fees and
completion date. You have our assurance that we will endeavor to keep the costs as low as
possible commensurate with the work involved.
Although not a part of this specific arrangement, we are available to assist the City in other
audit -related areas. Such areas might include loan staff assistance in completing the City's
responsibilities under these arrangements, assistance in the preparation of Official Statements as
contemplated by the "Disclosure Guidelines for State and Local Governments" issued by the
Government Finance Officers Association, verification and bond coverage letters issued in
connection with bond refundings and other financings, special reviews of selected areas, etc.
Arrangements for such related services will be made separately at the time of your request.
Interim audit billings will be delivered as the work progresses as specified in our proposal.
We are pleased to have this opportunity to be of service to you and assure you that this
engagement will be given our dose attention.
Very truly yours,
CITY OF FAYETrEVILLE
PRICE PROPOSAL FOR CITY OF FAYETFEVILLE
We recognize that you must closely monitor the costs and expenses associated
with annual financial audits. Our insistence on proper planning and control of
each engagement keeps our fees to a minimum, so you can be assured that our
fees will be competitive in relation to the services provided. Based on our
experience and discussions with the City, we estimate the all-inclusive
maximum price, including out-of-pocket expenses for the December 31,1993
through 1996 audits to be as follows:
Audit.
CAFR, Single Audit, Management Letter
First -Time Through Work
Assistance in Meeting Requirements of GFOA Program
Training Provided to Your Staff
Option A with Supplemental Services (discussed on page 4)
Supplemental Services Option —
Cash Credit on 1993 Fees (discussed on page 4)
Option B — without Supplemental Services —1993
ARTHUR ANDERSEN
Ells
$50,000
-0-
-0-
$ 50,000
(4,000) 03
0 /j
$51,500 ,v,^'p"
$53,000
$54,500 �i /
tni
CITY OF FAYETTEVILLE
APPENDIX A
SCHEDULE OF PROFESSIONAL FEES AND EXPENSES
FOR THE AUDIT OF THE 1993 FINANCIAL STATEMENTS
Standard
Quoted
Hourly
Hourly
Hours Rates
Rates Total
Engagement Partner 100- 120 $280- 335
$150- 200 $16,000
Manager 155 -185 200-250
100-150 15,000
Seniors and staff
accountants 745-895 75-180 50-100 41,000
Subtotal !ate 4741) 72.E
Less — Additional Investment for First -Time Through Review (22,000)
Total W1000
y,00a
ARTHUR ANDERSEN
CITY OF FAYETTEVILLE
We would expect the related fees for years subsequent to 1993 to be the same,
except for inflation adjustments and significant changes in operations. Included
in the fees are periodic consultations and attendance at City Council meetings.
We feel strongly that in order to facilitate open and frequent communications,
management must have access to their engagement team without fearing an
additional billing for each consultation or discussion. Of course, our resources
are available for special project needs at the City, including potential
reengineering of accounting department functions, performance of arbitrage
rebate calr tions, specific internal control reviews, efficiency and profit
improvement studies, compensation an sews, and consultations.
These estimates assume that the same level of assistance provided in prior
years by the City for the preparation of all necessary year-end closing entries
and audit workpapers, and the assistance from Internal Audit, will continue to
be provided in the current and future years.
The estimated fee information, provided at your request, is intended to show
the order or magnitude of possible fees; however, in accordance with the
requirements of the Texas State Board of Public Accountancy, it is not intended
as a binding offer.
We have a reputation for making firm price quotes and getting our work
completed within a specified timeframe and at a specified price. If this fee
estimate is inconsistent with your prior experience or expectations, we would
weknme the opportunity to discuss it with you.
ARTHUR ANDERSEN
PAGE3
CITY OF FAYETTEVILLE'
Supplemental Professional Services
We recognize that budget constraints frequently prevent an organization from
addressing areas which need attention Therefore, we are willing to provide, as
part of the audit and at no cost to the City, additional professional services of
$2,000 per year for each year of the four year contract. These services can
provided in any mutually agreeable area, suc asjt fli" o 1
• Arbitrage rebate calculations • Assistance in developing formal
• Reengineering of accounting
department functions
• Productivity and efficiency
reviews
• Assistance in improving fixed
asset records
Davis -Bacon monitoring
procedures
• Computer systems consultation
• Review of accounting controls
• Strategic planning
• Loan staff assistance
Alternatively, we are prepared to offer a cash credit on the 1993 fees, equal to
the cost of the supplemental services, which is approximately 50 percent of the
four year total,
Training Courses
As previously mentioned, as part of our commitment to the City, we extend an
offer to allow the City to send up to three people per year to our governmental
training courses in Dallas at no cost.
First -Time Through Work
It is our policy to absorb the start-up cost involved in familiarizing ourselves
with the ooerations, systems, procedures and policies and analyzing and
verifying certain historical data.
Manner of Payment
We anticipate that the City will make payments as the work progresses, that
interim billings shall cover a period of no less than one month, and that 25%
will be withheld from each billing pending delivery of final reports. Progress
billings will be itemized based on number of hours spent on each fund.
ARTHUR ANDERSEN
PACE4
REQUEST FOR PROPOSAL FOR INDEPENDENT AUDIT
CITY OF FAYETTEVILLE, ARKANSAS
93-2
The City of Fayetteville invites proposals to audit the financial
statements of the City for fiscal years ended December 31, 1993 to
1996, including all funds which are included under the provisions
of the Single Audit Act of 1984.
I. PROCUREMENT PROCESS
A. One (1) signed original and nine (9) signed copies of the
proposal are to be delivered to the following address in
a sealed envelope with the outside clearly marked with
the name of the firm, address of the firm, and the words
"Independent Auditor Proposal":
Peggy Bates
Purchasing Manager
113 W. Mountain
Fayetteville, AR 72701
Proposals will be received at this address until July 26.
5:00 .m.. At that time they shall be opened in room 306
at the City Administration building.
B. Upon opening the proposals, the Auditor Selection
Committee will convene to evaluate the proposals on the
basis of the criteria described below. Interviews will
be held with the three firms deemed to be the most highly
qualified to provide the services required. Prices will
be negotiated with the firm ranked the best qualified by
the selection committee. If the selection committee is
unable to negotiate a satisfactory contract with the top
ranked firm, negotiations with that firm shall be
terminated, and negotiations would begin with the next
highest ranked firm. Once a recommendation is reached by
the selection committee, the selection will be presented
to the City Council for their approval.
1
EXHIBIT
i
At any point in the selection process, the proposer may
be requested to submit information supplemental to the
proposal. Copies of last year's CAFR are available to be
checked out from the Internal Auditor. These documents
must be returned with the audit proposal. In addition,
the City's budget and prior year audit work papers are
available for review. The Internal Auditor will be
available to provide additional information prior to the
opening of the proposals.
The following tentative timetable has been established
for the completion of the award of an audit contract:
Advertisement for Proposals June 20 &
July 11
Opening of proposals July 26
Committee Review and Negotiations Aug 3-13
Presentation to Board of Directors Sept 7
C.
D.
Proposals will be evaluated on the following criteria:
1. The firm must be a Certified Public Accounting firm
properly licensed to practice in the State of
Arkansas.
2. The firm must meet the independence standards of
the GAO Standards for Audit of Governmental
Organizations, Programs, Activities and Functions.
1. Qualifications of the firm and its coordinating
office in performing governmental audits.
2. Experience, Competence, and Capacity for
Performance of the firm and its coordinating office
in governmental audits.
3. Proposed method of performing audit.
4. Past performance of the firm and its coordinating
office in governmental audits.
Audit Contact
Any vendor contact concerning this RFP should only be
directed to:
Yolanda Perez -
Internal Auditor
113 W. Mountain
Fayetteville, AR, 72701
(501) 575-8290
2
E. Reservation of Right of Rejection
The City of Fayetteville reserves the right to reject any
or all proposals when it is in the best interest of the
City.
II. AUDIT OBJECTIVES AND SCOPE OF SERVICES
A. There are two objectives of the services
RFP. Each responder must consider
objectives separately and reflect such t
proposal:
1. To render an unqualified opinion
Purpose Financial Statements of
Fayetteville, and to meet the audit
the laws of the State of Arkansas.
covered by this
each of these
treatment in the
on the General
the City of
requirements of
To assist in the preparation of the Comprehensive
Annual Financial Report of the City of Fayetteville
in order for the City to receive the Certificate of
Achievement for Excellence in Financial Reporting
presented by the Government Finance Officers
Association.
The auditor will be expected to comply
substantially with GASB reporting standards in all
work associated with the production and submission
of the CAFR.
The CAFR will be prepared in such detail as to
provide the City with useful information in regard
to the City's organization and financial reporting
structure.
B. The audits will be conducted in accordance with Generally
Accepted Auditing Standards, as well as the following
guidelines and requirements:
1. Standards for Audit of Governmental Organizations,
Programs, Activities and Functions (1987 Revision)
2. Audits of State and Local Governments -OMB Circular
A-128
3. Uniform Requirements for Assistance to State and
Local Governments -OMB Circular A-102
4. AICPA Industry Audit and Accounting Guide - Audits
of State and Local Governmental Units
5. OMB Compliance Supplement for Single Audits of
State and Local Governments
3
6. Applicable laws of the State of Arkansas
The Arkansas
Committee has
record keeping
1973.
Legislative
exempted the
requirements
Joint Auditing
City from the
of Act 159 of
In the event that there are conflicting or otherwise
inconsistent policies applicable to financial and
compliance audits of Federal awards, the following order
or precedence shall apply:
i. Single Audit Act of 1984 (Public Law 98-502)
2. OMB Circular A-128
3. Agency regulations implementing OMB Circular A-128
and the Single Audit Act
4. Agency program regulations
5. Federal Financial Assistance Agreement
C. The periods to be covered are the City's fiscal years
ending December 31, 1993, 1994, 1995, and 1996. A
contract will be awarded for all four years upon approval
of the City Council with the consent of the proposer in
accordance with the terms of the proposal. Each year of
the contract shall be contingent upon funds being
appropriated. Should funds not be appropriated, the
contract would be cancelled for any remaining years.
D. All adjusting entries will be submitted to the city in
writing with sufficient explanation and detail, so that
they can be easily understood and properly posted to the
financial accounts.
The auditor shall make a draft of the Comprehensive
Annual Financial Report (CAFR) available to the City by
the 15th of May each year.
The auditor shall submit 150 copies of the final General
Purpose Financial Statements to the City by June 15 of
each year.
Prior to June 15 of each year, the auditor will issue a
management letter. Where appropriate, recommendations for
system improvements are to be included and the Auditor
may be requested to provide assistance to implement
recommendations. A draft of this letter should be
submitted for review by the City before final copies are
prepared. The Auditor will provide 50 copies of this
letter.
0
E. Auditor involvement in the preparation of the CAFR will
include the compilation and assimilation of the data
between the Letter of Transmittal and the Statistical
Section. City staff will produce the material contained
in the Letter of Transmittal and a major portion of the
Statistical Section. The auditor will be expected to
reproduce the City prepared data in the same format and
type style as the remainder of the CAFR before the CAFR
is printed.
The independent auditor is expected to provide assistance
in interpreting financial reporting requirements. It
will be the auditor's responsibility to proofread, cross
check and critique the entire CAFR document in addition
to auditing the numbers and disclosures contained
therein.
The CAFR will be written, typed, printed and distributed
to GFOA by June 15 of each year. The City will provide
the covers, tabs, and spines to the auditors for binding
of 150 copies of the CAFR. The City will also specify
preferences in the format of the CAFR.
F. The auditor in charge shall conduct an entrance and an
exit conference with the City.
Review of accounting systems, test of internal controls
and test of transactions should occur prior to year end.
A list of all work papers and schedules to be prepared by
the City staff should be presented by November 1 of the
preceding year. This list should include any documents
which will need to be pulled for auditor review.
The general ledger will be closed by the third week of
March and the trial balance prepared.
Year end field work shall be completed by May 1.
H. Interest of Auditor:
Auditor covenants that neither it or any of its members
has any interest and shall not acquire any interest,
direct or indirect, financial or otherwise, that would
conflict in any manner or degree with performance of
service hereunder. Auditor certifies that no one in
their firm has or will have, during the course of the
firm's audit contract, any financial interest under this
agreement as an officer or employee of City.
I. Non -Assignability:
Both parties recognize that this proposal is one for
personal services and cannot be transferred, assigned, or
sublet by either party without prior written consent of
the other.
J. Worker's Compensation:
By executing an agreement, Auditor certifies that it is
aware of the provision of Ark. Stat. Ann. Sec. 81-1305,
which requires every employer to pay or provide
compensation for an employee's disability or death from
injury arising out of or in the course of employment and
certifies that it will comply with such provisions before
commencing the performance of the work of this proposal.
R. Miscellaneous provisions:
1. Periodic progress billings may be submitted as work
progresses, but not more often than monthly and not
more than 75% of the estimated cost of audit
services will be paid during the yearly audit
period. The remaining 25% will be paid after total
yearly contract fulfillment.
The total progress billings must be itemized
based on the amount of time expended on each
fund (with the Water and Sewer fund divided
between water and sewer).
2. A copy of the audit work papers will be presented
to the City at the completion of the audit, and
prior to final payment. This copy of the audit
work papers shall become the property of the City
when final payment is made.
3. The auditor shall keep the City advised of pending
and actual changes in financial disclosures,
accounting practices and reporting guidelines which
would impact the City and its financial records,
and shall be available for consultation and
clarification of such matters.
6
III. DESCRIPTION OF THE GOVERNMENTAL ENTITY AND ITS ACCOUNTING
SYSTEM
A. The City of Fayetteville is a municipality in the State
of Arkansas. The City currently has a General Fund which
is the main operating fund for the City, seven special
revenue funds, two debt service funds, four capital
projects funds, six enterprise funds, three internal
service funds, five trust funds, and three account
groups.
B. All intergovernmental grants, entitlements and shared
revenues will be included under the single audit concept.
C. The laws of the State of Arkansas require an operating
budget for the General Fund. This budget is disclosed in
the CAFR and reflects all approved amendments. All other
general fund type funds which have an adopted budget
shall be disclosed in the same manner with appropriate
disclosures for any general fund types which do not have
an adopted budget.
D. Description of the Automated Accounting Systems
1. The City has a data processing division which
consists of four full time employees, a data
processing manager, two programmer/analysts, and a
systems operator. Assistance from this division in
obtaining necessary reports and data can be
obtained on a scheduled basis.
The City since 1991 has been converting to a new computer
system. Currently, the City is utilizing the following
packages on an IBM AS400 mainframe
(Model D50, 48MB Ram, 5GB disk storage).
a. New World Software, general ledger
package.
b. New World Software, purchase order
package which interfaces with general
ledger and inventory.
c. New World Software, accounts receivable
package which interfaces with general
ledger.
d. New World Software, payroll which
interfaces with general ledger.
e. New World Software, utility billing for
water, sewer, and sanitation which
interfaces with general ledger.
f. New World Software, permits and
inspection package.
g. New World Software, inventory packages
for the City Shop, Traffic and Water and
Sewer Division which interface with
vehicle maintenance and general ledger.
h. New World Software, vehicle/equipment
maintenance which interfaces with
inventory and general fund.
i. New World Software, budget package which
interfaces with general ledger.
j. New World Software, cash receipts
package, which interfaces with the
general ledger.
k. New World Software, fixed assets package
which interfaces with general ledger.
1. New World Software, animal licensing
package.
m. New World Software, municipal court
package (to be converted in 1994).
n. New World Software, parking ticket
package (to be converted in 1993).
The City has utilized the following packages on an
IBM system 36 mainframe (5360 Series, 3 megabyte
memory, with 1,075 megabyte of disk space).
a. Cameo Software Solutions, general ledger
package.
b. Cameo Software Solutions, purchase order
package which interfaces with general
ledger and inventory.
c. Cameo Software Solutions, accounts
receivable package which interfaces with
general ledger.
d. Cameo Software Solutions, payroll which
interfaces with general ledger.
e. Cameo Software Solutions, Utility billing
for water, sewer, and sanitation which
interfaces with the general ledger.
f. Cameo Software Solutions, Permits and
Inspection package.
g. Cameo Software Solutions, Inventory
package for the City Shop and the Water
and Sewer Division which interface with
vehicle maintenance and general ledger.
h. Cameo Software Solutions, Vehicle/Equip
Maintenance which interfaces with
inventory and general ledger.
i. Cameo Software Solutions, Budget package
which interfaces with general ledger.
j. Cameo Software Solutions, Cash Receipts
package, which interfaces with the
general ledger system.
k. Cameo Software Solutions, Fixed Assets.
1. Cameo Software Solutions, Workorder
package.
9
I
3. The City currently has the following systems
which are run on a Microdata Reality 8000
mainframe (these systems will be phased out
during the next year):
a. Investments package which will be
converted to the New World Software
package for the IBM AS400.
b. Municipal Court package which will be
converted to New World Software package
to be run on the IBM AS400.
c. Hotel, Motel and Restaurant record
maintenance to be converted to the
Municipal Billing package on the New
World AS400.
d. Parking ticket package.
4. The City has personal computers which are
interfaced with the IBM system 36 and or AS400
and use various different software packages,
including the following:
a. Spreadsheet software
b. Word processing software
c. Graphics enhancement software
5. The City also has an IBM system 36 which is
used for the Police, Fire, and Central
Dispatch. This system runs CHIEFS software
package by Public Safety Management, an Ohio
corporation. This IBM system 36 will be
connected to the IBM AS400 system during the
1993 fiscal year.
E. Office space is available for audit staff use. Access is
available to a telephone, and access may be made
available to a computer terminal connected to the
mainframe.
10
VI. TECHNICAL QUALIFICATIONS AND APPROACH
The format of the proposal may be styled at the discretion of
the auditor. However, all proposals will address each of the
following items in the order presented:
A.
1. Describe the firm's strengths, audit philosophy and
strategy for the future.
2. Describe the firm's clientele.
3. Describe what positions have been taken by the firm
with the AICPA, FASB or GASB which could be viewed
as controversial.
4. List any members of the firm which are nationally
recognized professionals in public finance or
government accounting, such as members of the
executive boards of committees of the GFOA or GASB.
5. Describe the firm's affirmative action plan and how
minorities are placed in the firm.
1. Qualifications of the Coordinating Office:
a. State whether the office is part of a
national, regional or local accounting firm.
b. List the number of partners, managers,
supervisors and staff located in the
coordinating office in the audit, tax, and
management consulting divisions.
c. Describe the extent of statistical and
computer assisted audit techniques used in
governmental audits including the use of
microcomputers to generate work papers.
d. Describe the organization of the audit staff.
11
2.
3.
Availability and qualifications of the assigned
individuals:
a. List the partners, managers and supervisors
who will be assigned to the engagement.
Please provide specific qualifications of
these individuals in municipal accounting and
auditing. On your list, include education,
position in the firm and years and types of
experience.
b. Describe specialized skills, training or
background in public finance and governmental
accounting of the assigned individual staff
members. Indicate which of the assigned staff
members have completed, within the last two
years, at least 80 credit hours of continuing
education and training that contributes
directly to the auditor's professional
proficiency to perform the audit, including
specifics on training in the governmental
accounting and auditing field.
c. Address the availability of staff members both
during the audit and throughout the year for
consultation. Include an explanation of the
plan your firm has to commit the necessary
resources to ensure completion of the audit
work by the due dates.
Description of the firm's internal quality control
procedures:
a. Outline the levels of review to which work
papers are subjected.
b. Describe any disciplinary action imposed by
the AICPA, State Boards of Public Accountancy,
State Societies of CPAs, or Securities and
Exchange Commission during the past three
years indicating any involvement of the
coordinating office.
c. Describe results of recent peer review and its
status under the Peer Review Program.
12
C
D.
Proposed method of performing audit
1. Describe how the firm's overall philosophy applies
to this particular engagement.
2. Describe the audit plan in general and specify
areas that in your opinion may require particular
audit emphasis.
3. Explain the firm's understanding of the audit work
that is to be performed for the City of
Fayetteville.
4. Describe in detail the type of personnel assistance
that the City would be expected to provide and how
this would be coordinated by the auditors with the
City management.
5. Indicate in detail computer expertise which would
be expected from City staff or other resources
expected in order to complete the control reviews.
1. List local government clients or other clients
which are felt to be relevant to this RFP which are
currently or have been served by the firm and the
coordinating office, indicating those having a
Certificate of Achievement for Excellence in
Financial Reporting awarded by GFOA.
2. Provide names and telephone numbers of appropriate
officials for reference purposes.
3.
1. Basis for fee and not -to -exceed cost shall be
submitted to the Purchasing Officer in the sealed
proposal envelope. This proposal should include a
schedule for each of the four years in the
following format:
a. Billing rates per class of employee
b. Estimated number of hours per class of
employee
c. Maximum not to exceed cost per year
d. Any special provisions which would affect the
proposed fees
VII. PROFESSIONAL POLICY
Attached is a copy of the City's Professional Contract
Policy. Proposals should be prepared simply and
economically, providing a straight forward, concise
description of auditor's ability to meet the requirements
for the project. Fancy bindings, colored displays and
promotional material are not required. Emphasis should
be on completeness and clarity of content.
W
The proposer shall procure and shall maintain during the life of
this contract Workmen's compensation insurance as required by
applicable State law for all of his employees to be engaged in work
at the site of the project under this contract and, in case of any
such work sublet, the contractor shall require the subcontractor
similarly to provide workmen's compensation insurance. In case any
employee engaged in work on the project under this contract is not
protected under Workmen's Compensation Insurance, the Proposer
shall provide and shall cause each Subcontractor to provide
adequate employer's liability insurance for the protection of such
of his employees as are not otherwise protected.
The Proposer shall procure and shall maintain during the life of
this contract Professional Liability Insurance in the amount of
$1,000,000 combined single limit.
Certificates of insurance stating coverage indicated above must be
delivered to the Purchasing Manager prior to issuance of Notice to
Proceed with the project.
15
sus.[CT. PURCHASING: .
ADMINISTRATIVE Professional Services
POLICIES a PROCEDURES Selection Policy:
MANUAL OTHER SERVICES
YVYs(R REVISIONS (FF[CTIV( DATE: FRD[
PUR-13 1 June 27, 1990 1 of 4
$UPERs(oes APPROVED IT:
January 30,199 Z) *'y
The purpose of this directive is to establish a formal
Competitive Selection of Professional Services Policy
for all professional services other than those for legal,
architectural, engineering, and land surveying and the
responsibilities for its execution.
A. The City and all its boards, commissions and
authorities shall competitively select based on
qualifications and performance evaluation criteria
all professional services done for or on behalf of
the City.
B. It is the policy of the city to publicly announce
requirements for the competitive selection for
professional services as referenced above, and to
negotiate contracts for such services on the basis
of demonstrated competence and qualifications for
the type of professional services required provided
that the services are rendered at fair and reasonable
prices.
PUR-13.03 RESPONSIBILITY
C. All municipal boards, commissions, and authorities
established pursuant to state statute or other
legislative authority other than that provided
for in A.C.A. tit. 14, ch. 47,A.C.A. sec. 14-47-101
et seq, shall be responsible for the implementation
of such policies and procedures as are hereinafter
delegated to the City Manager and the Board of
directors.
PUR-13.04 PROCEDURES
A. The competitive selection for such services shall be
conducted by a review committee which shall include one
board member appointed by the Mayo? to serve and
represent the board, the City Manager (or repre-
sentative), the Chief Financial Officer (or repre-
sentative), the involved Department Heads, appropriate
City personnel and may include professional, and/or
individuals with expertise in the community. The
review committee for each proposed contract shall
establish the qualifications and evaluation criteria
necessary for the specific services to be provided.
This committee shall be established prior to the
issuance of any RFP or RFQ so that it may review the
proposed RFP or RFQ.
B. The RFP or RFQ shall outline the structure of the
selection committee and shall state the point ranges
which will be used to select the firm. It shall also
state an expected cost range for the services.
C. The City Manager will cause to be advertised in a
newspaper of general circulation a notice that the City
has a need to contract for a particular professional
service and shall invite all interested parties to
submit, to the extent permitted by the ethical standards
of that profession, a statement of their qualifications
and other relevant information based on the evaluation
criteria specifically developed for the proposed services
to be provided.
'UR-13.05 5Eiu'rION PROCESS
A. In evaluating the qualifications of each firm, the
review committee shall include the following:
(1) OualificatiOfls in Kelation LO
be Performed: Information reflecting qualifications
of the firm. Indicated specialized experience and
technical competence of the firm in connection with
the type and complexity of the service required.
Subcontractors, if used, must be listed with
information on their organization.
(2)
Performance: Information reflecting the names,
titles, and qualifications (including experience
and technical competence) of the major personnel
assigned to this specific project. Provide detailed
breakdown of subcontractor's staff to be used and
how they are to be used to supplement your staff.
(3) Proc,sed Method of Doing Work: A proposed work
plan (description of how the project would be
conducted as well as other facts concerning approach
to scope you wish to present) indicating methods and
schedules for accomplishing each phase of the work.
Include with this the amount of work presently
underway.
(4) Past Performance:_ Previous evaluations (as set
forth in PUR-13.08) shall be considered a
significant factor. If previous evaluations with
this City are not available, the professional firm's
past performance records with City and others will
be used, including quality of work, timely perfor-
mance, diligence, ability to meet past budgets, and
any other pertinent information. Firm will provide
a list of similar jobs performed and person whom we
can contact for information.
(5) Price
In evaluating the qualifications of each firm, the review
committee shall consider the following (assigning point
ranges for each element from 10% to 35%, so that the
total for the five elements combined equals 100%):
(1) Qualifications in relation to specific project
to be performed;
(2) Experience, competence, and capacity of performance;
(3) Proposed method of doing work;
(4) Past performance; and
(5) Price.
C. The review committee shall evaluate all submittals and
may conduct interviews with up to five (5) firms
regarding anticipated concepts and the relative utility
of alternative methods of approach for furnishing the
required services and then shall select therefrom, in
order of preference, based on criteria established and
published by the review committee, no less than three
(3) of the firms deemed to be the most highly qualified
to provide the services required. The method of
selection shall be for each commettee member to rate the
firms based on the points established in the RFP or RFQ
so that each member selects 3 firms, rated 1,2,and 3.
The firm receiving the highest number of 1st place votes
shall be selected (if a tie occurs, the firm receiving
the highest number of 1st and 2nd place votes shall be
selected. If a tie still exists, the Committee shall
hold further discussions and a re -vote shall occur.)
D. The review committee or its designee shall then negotiate
a contract with the highest qualified firm for the
services to be rendered, at compensation which the review
committee, or its designee, determines to be fair and
reasonable to the City, subject to the approval of the
Board of Directors.
E. Should the review committee, or its designee, be unable
to negotiate a satisfactory contract with the firm
considered to be the most qualified, at a price deter-
mined to be fair and reasonable to the City, negotiations
with that firm shall be formally terminated. The review
committee, or its designee, shall then undertake
negotiations with the second most qualified firm.
Should the review committee, or its designee, be
unable to negotiate a satisfactory contract with
any of the selected firms, then the review committee
shall reevaluate the services including the scope
and reasonable fee requirements.
A. The selection committee will recommend, after
negotiations and review by the City Attorney,
Internal Auditor, Accounting Supervisor, and
Purchasing Manager, the most advantageous
contract to the Board for awarding.
P0R-13.07 CO TRACTS UNER Si0.000
A. The requirements for a review committee may be
waived and the review of qualifications as
hereinabove stated shall be delegated to the
responsible department head for recommendation
to the City Manager, who shall review and approve
or disapprove all professional services contracts
in an amount of ten thousand dollars ($10,000) or
less.
P0R-13.08 P 1ricSSTOKAL PR0.�^^ EVALUAT?ON
A. Upon completion or termination of a contract, the
division head responsible for the project will
submit a summary evaluation of the professional
firm's handling of the project to include the
following data:
(a) name of professional firm;
(b) date of contract and date of completion;
(c) cost as stated in initial contract, amount paid,
and reason for any difference;
(d) special strengths exhibited by professional firm;
(e) problems or weaknesses in professional firm's
handling of the project;
(f) adherence to time schedule by the professional
firm; and
(g) names of key personnel working on the project
and comments on their performance.
B. The summary evaluation will be sub#nitted to the
Purchasing Manager through the department director
and will be filed in the Purchasing Manager's records.
A copy will be sent to the professional firm. Written
comments received from the professional firm regarding
the evaluation will be filed in the Purchasing Manager's
records.
RESOLUTION NO. 87-90
RESOLUTION TO COMPETITIVE SELF TC IONNOF ROFEG AN SSIO��SERVICE
POLICY
BY THAT ONLY ONE BOARD
MEMBER BEAPPOIAUTiNTEDZTOGA REVIEW COIMLITTEE*...
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE CITY OF
FAYE'1TEVILLE, ARKANSAS:
Section 1. That Section I(D) of the Professional Services
Policy o the City of Fayetteville be and the same hereby is
amended as follows:
(D) The competitive selection for such services shall
be conducted by a review committee which shall include
one Board member appointed by the Mayor to serve and
represent the Board, the City Manager (or
representative), the Chief Financial officer (or
representative), the involved Department Heinclude
ads,
appropriate city personnel and may
professionals, and/or individuals with expertise in the
community. The review committee for each proposed
contract, shall establish qualifications
evaluation criteria necessary for the specific services
to be provided.
15th day of May , 1990.
PASSED AND APPROVED this
APP]
By:
ATTEST:
PROJECT
/i
QUALIFICATIONS
25
EXPERIENCE k
20
COMPETENCE
PAST PERFORMANCE
10
PROPOSED METHOD
OF DOING WORK
25
(TIME FACTOR)
COST & PRICING
20
ESTIMATE
TOTAL POINTS
100
COMMENTS:
DATE:
EVALUATED BY:
City of Fayetteville
Arkansas
Contact
Calvin E. Webb II
901 Main Street
Dallas, Texas 75202
(214) 741-8718
July 1993
EXHIBIT
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CITY OF FAYETTEVILLE
Technical proposal to provide
CITY OF FAYETTEVILLE
ARTHUR ANDERSEN & CO.
901 MAIN STREET
SUITE 5600
DALLAS, TEXAS 75202
services
PLEASE CONTACT CALVIN E. WEBB II AT (214) 741-8718
JULY 1993
ARTHUR ANDERSEN
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July 26,1993
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ARTHUR
ANDERSEN
ARTHUR ANDERSEN & CO SC
Honorable Mayor and Members of the City Council
ICity of Fayetteville, Arkansas
Arthur Andersen & Co.
Suite ?6(1()
`7111 Vain Street
ImIla, lX - ?il?-;-.1?
2214 741 flICI
We are very pleased to present our qualifications to serve you as independent auditors for the City of Fayetteville
for the fiscal years ending December 31,1993,1994,1995, and 1996.
I We are ready to serve the City of Fayetteville. Although our audit team will be from the Dallas and Tulsa offices,
we intend to serve the City of Fayetteville like a local client. We will never be more than a phone call away, and
could be in Fayetteville within hours if necessary. Additionally, we will be able to devote our most experienced
governmental personnel to this engagement because the City of Fayetteville has a December 31 year end as
opposed to the September 30 year end that most of our other governmental clients have. We have taken all
necessary steps to assure you of a client service team that is committed, experienced, and prepared to provide the
Ihigh quality, effective professional service that you deserve.
Our position as the largest professional services organization in the Southwest area is a direct result of our
I competence and commitment to superior client service. With Arthur Andersen, you gain access to a large network
of highly specialized experience, and a team of professionals who concentrate their full efforts toward
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understanding governmental entities.
In the pages to follow we have highlighted the many factors which we hope will make your decision a dear and
conclusive one — that Arthur Andersen is best suited and ready to meet the needs of the City of Fayetteville. We
want to be your auditors.
We would be pleased to meet with you and request that you please call either Calvin Webb, proposed
engagement partner, at (214) 741-8718 or Ben Kohnle, proposed engagement manager at (214) 741-8736 if we can
be of assistance to you in this process. We will meet all deadlines specified in the REP.
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Qualifications of the Firm
Why Select Arthur Andersen........................................................1
Firm Qualifications and Experience ............................................. 3
Experience, Competence, and Capacity for Performance 13
Resources that Serve the Government Sector ...........................13
What Makes Us Different From Our Competitors? .................14
Our Policies Regarding Staff Education and Development ...15
EDPAuditing................................................................................18
Use of EDP Audit Software.........................................................19
Engagement Partner, Manager, and Staff
Qualifications and Experience .............................................. 20
Peer and Public Review............................................................... 30
Proposed Method of Performing Audit 31
Specific Audit Approach............................................................. 31
Benefits to the City........................................................................ 48
Anticipated Potential Audit Emphasis Areas .......................... 49
ReportFormats.............................................................................. 50
Past Performance in Governmental Audits 52
The Scope of Our Government Services Practice ..................... 52
Similar Engagements with Other Governmental Entities ...... 53
Independence................................................................................ 54
License to Practice in Arkansas .................................................. 54
Appendix I - Audit Procedures 55
Appendix II- Report Format - Auditor's Report for the
Comprehensive Annual Financial Report 59
Appendix 111- Cross -Reference to the RFP 60
ARTHUR ANDERSEN
Table of
Contents
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CITY OF FAYETTEVILLE
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WHY SELECT ARTHUR ANDERSEN
Perhaps the most significant differentiating factor among the public
accounting firms is their ability to understand the needs of their clients and to
serve them effectively. All will claim to be unique, responsive and cost-
effective. But supporting such claims is difficult. Although Arthur Andersen
has a very strong government practice nationwide, most of the discussion in
this proposal is directed to the coordinating office (Dallas) and the specific
individuals who will be serving the City of Fayetteville. We have sought in
this proposal to document our claims and to deal principally with the
significant factors that set us apart from other firms, including:
Experience — We have served, or are currently serving in the Dallas office
as auditors for over 30 governmental entities. We are committed to the
governmental industry on a full-time basis and have more than 50
professionals who work in the government industry, that will be serving
you. By knowing your business, we can assure you no surprises in your
dealings with your outside auditors. In addition, we have experience in
dealing with municipalities that are subject to arbitrage rebate
regulations and we are familiar with the unique aspects and related
footnote disclosure requirements of the Arkansas Local Police and Fire
Retirement System Plan. Additionally, as members of the GFOA Special
Review Committee, Calvin Webb, proposed engagement partner, and
Bill Dillon, proposed engagement advisor, are uniquely qualified to
ascertain the adequacy of the City of Fayetteville's ("the City's") financial
report relative to its compliance with the GFOA guidelines. Additionally,
we will assist the City in responding to GFOA comments.
• Fresh Perspective - Our professionals offer you a fresh perspective,
which will foster new ideas and insights about the City's operations.
People - We have assembled a project team of highly qualified
professionals with municipality audit experience. Your Client Service
team has more than 50 years of experience in helping municipalities
succeed with their business. Our project team focuses its efforts on the
high risk areas of your financial operations to assure you no financial
surprises and a very efficient audit.
ARTHUR ANDERSEN
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Qualifications
of the Rrm
CITY OF FAYETTEVILLE
WHY SELECT ARTHUR ANDERSEN
Qualifications • Unmatched Resources - We have grown to become one of the largest
j y�.,�Finn public accounting ii. -ms in Dallas, the Southwest, and the nation. We
of the have more personnel and financial resources than any other firm. This
permits us to provide service to the City of Fayetteville as if it were a local
client. In addition, we can perform fast turnaround projects that demand
large personnel requirements. It also enables us to invest in technology,
research and education and to assure that we continue to give our clients
the best possible service. As a result, we have professionals dedicated
full-time to a number of special service areas. Additionally, most of our
current governmental clients have September 30 year ends. Therefore, as
the City of Favetteville's year end is December 31, we will be able to
devote our most experienced governmental resources to your audit
without conflict.
• Presence and Control - The project team is from our Dallas and Tulsa
offices. However, we intend to ensure that our people and resources will
be available to the City of Fayetteville at all times, just as if the City was a
local client. Responsibility and the decision making authority on the City
of Fayetteville engagement will be with Ca:vin Webb, the engagement
partner. He has over 14 years of experience seeing the public sector.
Calvin will have full authority to make all decisions for our fine
regarding our services to the City of Fayetteville.
• Team Player - We know w e are hired by and report to the City CounciL
I iowever. that does not mean we have to be in an adversarial role with
management. We view ourselves as a team player in helping the City of
Fayettefile continue to succeed. This is demonstrated by our
commitment to the City to allow three of your people a year to attend our
local government training courses.
• Benefits - You can expect a professiona: team that:
- Understands your business,
- Can provide sound advice on issues facing municipalities;
- Can respond quickly; and
- Can help you succeed.
ARTHUR ANDERSEN
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CITY OF FAYETTEVILLE
FIRM QUALIFICATIONS AND EXPERIENCE
Arthur Andersen is a leader in the government industry. In 1992, the firm Qualifications
rendered over 2,000,000 professional hours of service to government clients. s �{.,� �;
The Dallas office has more than 50 professionals who work in this industry. o the Finn
Their experience is illustrated by the representative list of clients we have
served as auditors in the last several years:
' Current Clients:
I. City of Fort Smith, Arkansas • Dallas Independent School
• City of Richardson, Texas District
• City of Lewisville, Texas • Dallas/Fort Worth International
• Cityof Bedford, Texas Airport
• City of Mansfield, Texas • General Services Administration
I. City of Mesquite, Texas • Central Texas Council of
• City of Farmers Branch, Texas Governments
• City of Irving, Texas • Tarrant County, Texas
I. City of Duncanville, Texas • Dallas County Community
• Garland Independent School College District
District, Texas • Dallas Area Rapid Transit
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Clients We Have Served:
• City of Dallas, Texas
• City of Fort Worth, Texas
• City of Plano, Texas
• City of Weatherford, Texas
• City of Arlington, Texas
• City of Carrollton, Texas
• City of McKinney, Texas
• City of Coppell, Texas
• City of Lancaster, Texas
• Town of Highland Park, Texas
• Denton County, Texas
• Irving Independent School
District, Texas
• Plano Independent School
District, Texas
• Duncanville Independent School
District, Texas
• Wichita Falls Independent School
District, Texas
All of our clients who have participated in and applied for the Certificate of
Achievement for Excellence in Financial Reporting awarded by the GFOA
have received the honor while being served by Arthur Andersen.
ARTHUR ANDERSEN
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CITY or FAYETTEVILLE
FIRM QUALIFICATIONS AND EXPERIENCE
Qualifications
of the Finn
In addition. Arthur Andersen has served or is carrently serving the following
clients in the State of Arkansan
AllteL Little Rock
American Savings Group, Inc , Springdale
Arkansas Electric Cooperatve Corporation, Little Rock
Arkansas Public Service Commission, Little Rock
Arkansas Student Loan Authority, Little Rock
Arkansas, State of, Department of Finance and Adnt,
Little Rock
Arkansas, Stale of, Office of Prosecutor Coordinator,
Little Rock
Arkla, Inc , Little Rock
Aromatique Incoporated, Herber Springs
Associated Products Inc, Hot Springs
Baptist Medical System, Little Rock
Cash Enterprises, Inc., llarr_son
Central Transformer, Pine Bluff
Charter Vista Hospital, Inc., Favettev i]le
Claridge Products and Equipment, Incorporatec,
I lan-ison
Conway Regional Hospital. Conway
Crews & Associates. Little Rock
Cross Oil & Refining, Co., Lnc., Smackover
Crossett Division of Georgia-Pacific Corporaton,
Crossett
Daily, West, Core, Coffman & Canfield. Fort Sin, th,,
Dillard Department Stores, Inc.,] itile Rock
Federation. of American Hospitals, little Rock
First National Bank of El Dorado, El Dorado
First National Building Company, Ittle Rock
First United Bancshares, Lnc , El Dorado
Fort Smith, City of, Fort Smith
Frost & Co., Little Rock
Genera: Air Conditioning Corporation. Little Rock
General Companies, The, little Rocx
General Mechanical Contractors, Inc., Little Rock
Harps Food Stores, Inc., Springdale
Hillcrest Day Care & Learning Center, Inc , Little Rock
Homelink Home Health Cam Partnership, Little Rock
Hudson Foods, Inc , Rogers
Hurt Acquisition Corp, Jonesboro
Independence, Count, of, Batesville
J.B. Hunt, Inc , Lowell
Krueger. W. A., Co. Arkansas Division, Jonesboro
Kw Bancsnares Inc., Little Rock
Little Rock Cellular Partnership, Little Rock
Lyon, Frank, Company, Inc., Little Rock
Magnolia Products Inc., Magnolia
Midwest Lime Company, Batesvile
Nationwide Health Propert, Fort Smith
Northwest Arkansas Paper Company, Springdale
Pearson, Ben, Division of The Leisure Group, Inc., Pine
B:u`f
Pcl Lndustries, Inc., Rogers
Pine Buff Arsena_, Pine Bluff
Pine Bluff Cellular, Inc.. Pine Bluff
Polyvend, ]nc., Conway
Resource Development, Fort Smith
Revere Corporation. Fort Smith
Rhecm Manufacturing, Fort Smith
Rosenbaum. Brothers. Little Rock
Sampling Technology, Inc., Waldron
Seam Ro crrg, Inc., Seam',
Smith Investment Management. Little Rock
Southwestern Energy Corp., Fayetteville
St. Edward Merry Medical Center, Fort Smith
St. Joseph's Regional Health Center, Hot Springs
Stephens Group, little Rock
Systematics, Inc., little Rock
Texarkana Cellular Partnership, Texarkana
United Medical Inc., Wynne
University of Arkansas, Fayetteville
Young Womer,'s O-uistian Association (YWCA), Little
Rock
ARTHUR ANDERSEN
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CITY OF FAYETTEVILLE
FIRM QUALIFICATIONS AND EXPERIENCE
Qualifications
of the Firm
What others say about us...
Your association with Arthur
Andersen, a recognized leader in
the public accounting profession,
will be valuable in supporting
your existing credentials. For
eleven consecutive years, a poll of
accounting professors taken by
Public Accounting Report, has
given Arthur Andersen the
highest overall rating. Rankings
were based on quality levels in
four categories: service to clients,
technical reputation, career
opportunities, and staff training.
A 1992 survey of Fortune
I000TM Executives found that
these officers ranked Arthur
Andersen the best public
accounting firm in nine
categories.
ARTHUR ANDERSEN
How Professors Rank the Firms
fr
2
PW
EY
PMM
PMM
PMM
PMM
PW
PW
PMM
PMM
PMM
3
PMM
PW
EY
EW
PW
PW
EW
EW
PW
VHS
PW
4
EY
PMM
PW
PW
EW
EW
PM
PM
EW
EW
EW
5
DT
CL
DT
CL
CL
CL
DHS
CL
DHS
PW
DHS
6
CL
DT
CL
DHS
DHS
DHS
AY
DHS
AY
CL
AY
Source: Public Accounting Report
. No survey was conducted in 1989; 1990 reflects post -merger firms.
How Business Executives Rank the Firms
Rank
2
3
4
5
6
Timeliness
PW
KPMG
EY
CL
DT
Responsiveness
PW
EY
KPMG
CL
DT
Audit Expertise
PW
EY
KPMG
CL
DT
Tax Expertise
PW
EY
DT
KPMG
CL
Efficiency
PW
CL
EY
KPMG
DT
Industry Expertise
PW
KPMG
CL
EY
DT
Strategic Thinking
PW
KPMG
EY
CL
DT
Adherence to Budget
EY
DT
KPMG
PW
CL
MIS Expertise
KPMG
PW
EY
CL
DT
OVERALL
PW
EY
KPMG
CL
DT
Sourte: The Big Sa Emluelois, by Fatum ]000'"' E ftm: publthed by nuaeon MWYH, J WL
PAGE 5
CITY OF FAYETTEVILLE
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FIRM QUALIFICATIONS AND EXPERIENCE
Qualifications We Offer Services To Meet Your Specific Needs
of the Finn Our firm's size permits us to dedicate significant resources to our government
practice. The firm has made significant investments in technology, research,
and education to assure we continue to give our clients the best possible
service.
We am a full service firm, offering audit, tax and consulting services to our
clients. The breadth of our services is unmatched by any other accounting
firm. We have professionals dedicated full-time to a number of special service
areas. Some of these services include:
• Arbitrage rebate calculations
• Cost allocation studies
• Organizational reviews
• Productivity studies
• Construction contract monitoring
• Real estate con ultation
• Construction management system
• Operational claim reviews
• Business systems consulting
• Computer controls and secunty evaluation
• Contract financial management
• Real estate appraisals
• Customized training programs
• Employee benefit plans
• Fraud and security consulting
• Utigahon services
• Management consulting
• Iega: information systems
• Management development training
• Strategic planning
• Treasury management reviews
• Facilities utilization reviews
• Occupancy costs analysis
• Compensation/benefits consulting
• Environmental consulting
ARTHUR ANDERSEN I I
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IFIRM QUALIFICATIONS AND EXPERIENCE
Construction Contract Monitoring Qualifications
• We are experienced in assisting clients in monitoring construction costs of U IC Firm
• during the construction process. Our work has resulted in significant savings
for clients due to identification of inappropriate charges.
Construction Management System Consultation
' We have experience in developing and implementing construction progress
management systems. These systems monitor the progress of construction
i projects and facilitate project management in the areas of cost management
and timely completion.
Real Estate Consultation
Our real estate consultants are experienced in various real estate and
economic development areas. Services we provide include economic impact
analysis, development strategies, market analysis, and the structuring of
• public/private partnerships. We also assist clients in lease structuring and
occupancy cost control.
Business Systems Consulting ("BSC")
The BSC group uses small and medium -range computer technologies to
facilitate clients' creative and productive use of information. We maintain a
central database of proven software solutions and assist our clients with
using these solutions to more effectively run their businesses. In addition, we
assist our clients with the design and development of custom applications
using databases and 4th generation languages.
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CITY OF FAYETTEVILLE
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FIRM QUALIFICATIONS AND EXPERIENCE
Qualification Arbitrage Rebate Calculations
of the Finn Issuers of tax-exempt debt car. lace significant liabilities for excess arbitrage
profits, so we have developed a system to help you comply with arbitrage
regulations. We have managed arbitrage rebate compliance projects for many
clients, Ltuding:
City o! Fort Sr Lth, Arkansas
Tulsa County, Oklahoma
Tulsa County Industrial Authority
Duncan (Oklahoma) Public L'tilitiei Authority
City of Highland Park, Illinois
City of Waco, Texas
Boulder County, Co:erado
County of Wake, North Carolina
Manon County, Ohio
Incarnate Word Healthcare
Provident Hospital
We retain several arbitrage specialists in Dallas who can offer their services to
tie Cite of Fayetteville.
Verification Services
Our exper.ence includes work with transferred pnxreds penalty calculations,
multiple escrows, and multiple refunda.gs with allocation of the refunded
bonds under the multipurpose issue Hiles. The following is a sampling of our
rcccnt verification clients:
City of Farmers Branch, 'I exam
City of Mansfie:d, Texas
City of Carrolton, Texas
City of Lewisville, Texas
City of Richardson, Texas
Garland Independent School District, Texas
Plano lnde, endent School District, Texas
City of Naperville, Illinois
ARTHUR ANDERSEN I I
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CITY OF FAYETTEVILLE
FIRM QUALIFICATIONS AND EXPERIENCE
Productivity and Efficiency Reviews
We have a proven approach for performing management studies which
focuses on improving efficiency and effectiveness. Our recommendations
usually generate savings which amount to several times our fees. We have
performed these reviews for many clients including:
City of Dallas, Texas
City of Fort Worth, Texas
City of Houston, Texas
City of New Orleans, Louisiana
City of Plano, Texas
City of Richardson, Texas
D/FW International Airport
Dallas Independent School District, Texas
Collin County, Texas
Denton County, Texas
Tarrant County, Texas
State of New York
ARTHUR ANDERSEN
Qualifications
of the Firm
PAGE 9
CITY OF FAYETTEVILLE
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FIRM QUALIFICATIONS AND EXPERIENCE
Qualifications Involvement in Government Organizations
of the i}- Firm Members of our local office's government services practice are involved in
national, state, and local government organizations such as the following:
GFOA
GFOA of Texas
Texas Municipal League
Association of School Business Officials
Southwest lnlergovemmental Audit Forum
We we frequently requested to participate in seminars and deliver speeches
to a vanety of government organizations such as:
GFOA
GFOA of Arkansas
GFOA of Texas
Texas Association of School Business Officals
Texas Municipal League
North Central Texas Council of Governments Roundtable
Lnstitate of Internal Auditors
Association of Government Accountants
In addition, Calvin Webb and Bill Dillon are active participants of the Special
Review Committee of the GFOA Certificate of Achievement for Excellence in
Financial Reporting Program. Both Calvin and Si]] will review your
Comprehensive Annual Financial Report for its compliance with the GFOA
Certificate program requirements before it is issued.
We are also very active in the standards -setting process of the AICFA, FASB,
and GASB. We take a genuine interest in our c ients and are concerned about
the issues and challenges they face. We spend significant time soliciting input
from our clients and understanding the effects of any proposed standard
changes before responding to Discussion Memorandum and Exposure Drafts.
Generally, we don't believe that the positions taken by our firm are
controversial.
ARTHUR ANDERSEN 1 I
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CITY OF FAYETTEVILLE
FIRM QUALIFICATIONS AND EXPERIENCE
' Government Competence Program Qualifications
Our Government Competence Program is coordinated and headed by Bert Of the Finn
' Edwards, our Government Industry Team Head, in Washington, D.C. In
addition to Bert, our Government Industry Team includes a core group of
partners and managers from across the county. Bert coordinates research,
federal contacts, and other inquiries on a national level for our government
practice.
This Government Industry Competence Program provides an interchange of
current industry developments and sharing of our engagement experience
' between all professionals in our government practice. We accomplish this
through:
' • Attendance at local and firmwide training specifically designed for
governmental entities.
I. Attendance at various training courses sponsored by GFOA,
including attendance at the GFOA National Convention.
• Interchange of information gathered and experience through
firmwide communications, meetings, and seminars.
• Direct access to federal officials. Our Industry Team is based in
'� Washington, D.C. Its primary firmwide responsibility is to maintain
contact with GASB, OMB, GAO, IRS, federal grantor agencies,
Capitol Hill and key groups such as GFOA and the Council on
Government Relations. The team can quickly cross-check issues
impacting governments on a confidential basis.
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FIRM QUALIFICATIONS AND EXPERIENCE
Qualifications Our Policy on Equal Employment Opportunity
of the •" • 'lm Arthur Andersen is co nnttted to a policy and practice of deciding all matters
relating to employment, including compensation, advancement, transfer and
promotion, solely on the basis of quahhcabnrs and merit. We do not
discriminate on the basis of race, religion, color, sex, age, nondisqualifying
handicap, or national origin.
Arthur Andersen maintains a commitment to pnmding equal employment
opportunities to our employees and to creating rewarding opportunities for
minority and / or women -owned and operated businesses. Our program of
assistance to these firms is comprised of the following:
• Provide audit, industry and other continuing accounting education at no
cost to minority firm professionals.
• Recommend to clients and potential clients the utilisation of smaller
minority firms, and we refer appropriate client service opportunities to
these firms.
• Make available to these firms the full resources of Arthur Andersen. The
technical expertise of Arthur Andersen's professionals or other resources
are provided as needed.
Arthur Andersen's commitment to ecual employment opportunity is further
evidenced by the fact that we were the first professional services firm to win
The Catalyst Award This is a national award which honors companies for
initiatives taken to foster women's leadership development. Arthur
Andersen's flexible work program and workplace/gender issues awareness
training are the hallmarks of the organization's effort to foster the careers of
women employees.
As a result, at professional personnel assigned to the audit reflect the City's
commitment to Affirmative Action.
ARTHUR AXDERSTh I I
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RESOURCES THAT SERVE THE GOVERNMENT SECTOR
Arthur Andersen is a business unit which participates in the international
professional services organization of Arthur Andersen & Co., Societe
Cooperative. Founded in 1913, we have grown to over 62,000 professional
personnel, operating out of over 300 locations in 72 countries. The firm offers
audit, tax and financial consulting services and can bring worldwide
resources to bear on the rapidly changing needs of individual clients.
A summary of our Dallas personnel by practice division is as follows:
tr
Number of Total Personnel
In Our Dallas Office
Arthur
Financial
Andersen
Number of
Consulting
Andersen
Total
Governmental
Category
and Audit
Tax
Consulting
Personnel
Professionals
Partners
28
16
20
64
4
Managers
61
32
157
250
8
Seniors
80
24
152
256
14
Staff
145
40
255
440
29
Subtotal
314
112
584
1010
55
Support
--
--
--
187
TOTAL
314
112
584
1197
55
The professional personnel assigned to your engagement will be from the
Dallas and Tulsa offices.
The senior -in -charge and staff assistants will be employed on this
engagement on a full-time basis during the preliminary and final phases of
the audit. The engagement partner, engagement manager, and service
advisors will work on this engagement on a part-time basis, but will be
accessible to you at all times.
All Client Service Team members, as discussed on page 20, will be available
for consultation throughout the year. Our fee, discussed in the separate "Price
Proposal" includes periodic consultants and attendance at City Council
meetings We feel strongly that in order to facilitate open and frequent
communications, management must have access to the Client Service Team
without fearing an additional billing for each consultation or discussion.
ARTHUR ANDERSEN
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CITY OF FAYETTEVILLE
WHAT MAKES Us DIFFERENT FROM OUR 1
COMPETITORS?
Experience Arthur Andersen differentiates itself by its people. Our professionals know I
that they can only succeed if our clients succeed. It is cur aun to exceed your
Competence, and expectations and contribute to the success of your organization In addition to
V�QQ��AA
, w y for our professionals and their corrtnutment to serve you, we also differentiate I
QQ!VI ourselves through education and industry training.
Performance '
Education
Each of ow professionals receives an average of 150 hours of training per
year. We believe in education and invest more in it than our competitors.
Approximate:v nine percent of our annual revenues are reinvested in the
training of the professionals who serve you. You are assured of working with
people who are current and sharp and can give you the insight and efficient
service you are looking for.
Industry Training
Arthur Andersen pioneered the concept of industry specialization in the
1930s. Today it is still the most effective way to develop insightful and
knowledgeable leadership among our client service professionals. Through
specialized industry training and experience with governmental entities, you
can be sure that you won't have to provide on -the -;oh training for Arthur
Andersen staff members or managers.
Audit Philosophy '
Our audit philosophy focusses or. "building -in quality" rather than
"inspecting for quality." The engagement partner and manager will devote
significant attention to up -front planning and meeting with City personnel.
As a result of the front-end and continuous direr on, supervision, and
detailed review of workpapers by the engagement partner and manager, we
have found that unnecessary work is eliminated. As a result of this emphasis,
we often find that our tota'• hours incurred on an audit are fewer than our I
competitors, although we typically has e a higher proportion of engagement
partner and manager hours.
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1 OUR POLICIES REGARDING STAFF
EDUCATION AND DEVELOPMENT
' Clearly the most valuable resource we provide is professionals who
understand the City's operations and needs. Arthur Andersen has earned a
reputation as a leader in the government sector, even among our competitors.
We offer the most comprehensive training in our field with a current
curriculum of 1,600 firm -sponsored courses and we commit more resources
to training and development than any other firm. Our professionals receive
standardized training on the subjects of accounting, auditing, tax,
management information consulting, and specific industries, including the
' government sector.
This commitment is recognized throughout the industry. The American
Society for Training and Development honored Arthur Andersen with its
prestigious award for excellence in professional education. In addition,
"Mirrors of Excellence," a review of ten organizations recognized nationally
for their excellence in personnel development, said:
"Since service, built on the knowledge and expertise of the firm's employees,
is its product, Arthur Andersen places a premium on well -honed skills and
up-to-the-minute knowledge of its people. The fine views life-long
• continuing education as part of its culture.. . The fine invests
• approximately nine percent of its revenues each year in professional
education.
"New employees gain necessary knowledge and skills to do their jobs, but
' they also become aware of the proper attitude toward jobs and the clients
with whom they will work. They learn that Arthur Andersen's only product
is the professional competence of its employees."
Our commitment to the continued education of our personnel is unparalleled
in the profession. In 1992, Arthur Andersen invested $340 million in
continuing professional education This will ensure the future quality of our
practice and continue to improve the level of service we provide our clients.
' Arthur Andersen is the only major accounting and consulting firm which
owns and operates its own residential training facility — a 14 acre campus
near Chicago where we offer more than 1,600 specialized courses to our
professionals and client personnel. We conduct over 210,000 classroom days a
year in this facility.
IARTHUR ANDERSEN
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CTTY OF FAYETTEVILLE i
OUR POLICIES REGARDING STAFF
EDUCATION AND DEVELOPMENT
Expe ienceSome courses our practice periomnel participate in inc:ude:
Competence, and Government Services Basic Industry Training School — This course provides
Qwc for an introduction to government accounting and emphasizes those accounting
I`r f principles which are generally accepted in the government environment, but
Perionnance which differ from private sector accounting principles.
Accounting for Governmental Units Under GASB —The ever increasing
expansion in governmental accounting brings with it the need for
professionals who are well -versed in governmental accounting and financial
reporting as promulgated by GASB. This course will cover all the
authoritative pronouncements currently in effect. Moreover, the course will
emphasize the practical applications of these pronouncements.
U.S. Advanced Industry Seminar — Provides an update of current ,
developments in the government/education/not-for-profit industry and
related technical issues for Arthur Andersen in the U.S. marketplace.
Satisfying Compliance Auditing Requirements of Financial Assistance
Programs— Featuring a practical "how to" approach, this course provides
an extensive framework for meeting compliance auditing requirements of
financial assistance programs. This course also provides information for
those performing Singe Audits for local units, especially those receiving I
pass -through funds
1988 Yellow Book: Government Auditing Standards — Government auditing '
standards were issued in July 1988. These standards superseded the 1981
revision of the Yellow Book and became effective for audits staring
January 1, 1989. This expanded edition clarifies the CPF. and quality control
requirements identified ir. the :988 Yellow Book. It addresses many of the
questions and concerns voiced by the GAO in 1989. It aloe includes enhanced ,
coverage of SAS 68 and informative discussion of emerging issues relating to
the evolution of government auditing standards, plus examples and
discussion questions w:tich simplify difficult compliance issues.
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CITY OF FAYETTEVILLE
OUR POLICIES REGARDING STAFF
EDUCATION AND DEVELOPMENT
Impact of the Single Audit Concept on Your Practice — This course fully Fypppjpnce
explains the features of the Single Audit Act of 1984 and the related AICPA _''YY'"`''�� ��`"'�� ��
Audit Guide, AICPA Audits of State and Local Governmental Units. It also Competence, and
reviews the U.S. Office of Management and Budget implementation IW
regulations, the applicable revised "Yellow Book" requirements, and the
' applicable requirements of SAS 68. This course provides the information Pedonnanm
needed by those planning to attend the course Satisfying Compliance Auditing
Requirements of Financial Assistance Programs.
As part of our commitment to provide the City full service, we extend an
offer to allow the City to send up to three people a year to our government
training courses in Dallas at no cost.
As a firm, we closely monitor compliance with the CPE requirements
required by government auditing standards. The various courses listed above
satisfy such requirements.
This commitment to training and education assures the City of Fayetteville
that the staff assigned to your engagement will be of the highest quality.
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CITY OF FAYETFEVILLE
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EDP AL-DITING
• Information Technology has had a pnifcrund impact on the discipline of
Expenencei auditing. In response, the Dallas office of Arthur Anderson has assembled the
Competence, and Computer Risk Management group (CRMI, the largest team of dedicated
w r r� full-time EDP audit specialists within the worldwide organiaatron of Arthur
Ca r Andersen. We plan to use selected individuals from this 18 -member team as
PWo manse a key resource in assisting the City to better understand and control the risks
posed by modem information technology.
The CRS\4 group will participate in the audit process as an integral part of the
engagement team in the audit of the City s financial systems. In connection
with our anticipated audit approach, we plan to utaiize our EDP auditing
skills in the following areas:
• CRM personnel will review the general controls environment. The
purpose of this review is to determine whether sufficient and adequate
controls are in place to provide a basis for audit reliance thereon, and to
generate recommendations to assist management in improving the
overall level of internal control.
• Subsequent to the EDP internal control review procedures. CRM will be
responsible for implementing audit software to increase audit
efficiencies. Arthur Andersen's computer professionals may create
"custom" audit software, or draw from a library of pre -written general
audit software. We will determine the most efficient audit software
approach after our general controls review
• Based upon the results of our planning process, our CRM group may
perform application reviews to assess the application control
ere ironrent
• Also, in connection with the execution of our audit, we anticipate
utilizing certain computer -based data Io facilitate our work This will
require making available certain data files for our use, which we
anticipate will require a minirnum amount of both machine and operator
time.
ARTHUR ANDERSEN
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CITY OF FAYETTEVILLE
USE OF EDP AUDIT SOFTWARE
Our audit team will utilize the latest audit software to improve the efficiency
of the audit. This includes both Arthur Andersen developed software and
third -party software. Examples of software technology that can be used on
this engagement include:
Win Art CD-ROM technology that allows the audit team to
electronically research accounting, auditing and
other issues on a CD database that includes all of
our firm's technical literature.
Win Sample A sampling program which assists the audit team in
determining the most effective sampling
methodology, estimating sample sizes and
computing statistical results.
EASY The audit team uses our engagement
Administrative Software ("EASY") to develop work
programs, monitor time, and perform other
administrative tasks.
WinMTBS We use our "Microcomputer Trial Balance System"
("WinMTBS"), to prepare lead schedules and trial
balances.
Microsoft Excel A spreadsheet and database product the audit team
uses to perform financial and data analysis.
Microsoft Word A word processing product used for writing
for Windows reports and memos.
ABC Flowcharter A flowcharting program that is used to document
transaction processing cycles.
ARTHUR ANDERSEN
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Cm OF FAYETTEVILLE 1
ENGAGEMENT PARTNER, MANAGER, AND STAFF 1
QUALIFICATIONS AND EXPERIENCE
EXpellence, Client Service Team Organization i
Competence, and ENGAGEMENT SERVICE ADVISORS
PARTNER
Capacity for PARCahiNEWehb Bill Dillon, Audit
Performance Jim Downs, Audit
Tom Ellis, EDP ,
Mike Travis, Systems Consulting
ENGAGEMEIT Bruce Bernstlen, Tax
MANAGER
Ben Kohnle I
SENIORS -IN- The depth: of resources c,ceur governmental and utility
CHARGE Shelley Kieffer somas personnel provides a local group cf highly
Amy Dozier sElei pmfrs5ionais. Picric see parts 21 —1b for neon
member resunus
HIGHLY QUALIFIED
STAFF
1
Responsibilities of the Team
Engagement partner — will have complete responsibility for ail work performed for the City. He will participate
in planning, attend client meetings and review all significant audit issues with the City, the engagement manager
and seniors -in -charge to enable our firm to sign the audit report.
Service advisors — will provide technical and relevant industry expertise. Our engagement advisors will be
available to consult with the City and client service team, as needed.
Engagement manager — wit maintain continuing contact with the engagement team through a review of
working papers, discussions with senior and staff accountants, and meetings with client personnel. In addition, he
will be responsible for working with the engagement partner in the resolution of problems and in the overall
administration of the engagement. 1
Seniors -in -charge — will be responsible for the day-to-day supervision of the engagement On the basis of the
staff's experience and abilities, the seniors will assign various portions of the audit work to the staff and monitor
their performance.
Once we are selected as your auditors, we will specfically identify the staff accountants
I
Note: All members of cur staaare college,e+aduatcs, most of uwhcrn are CPAs, with six months to
iC1+e yar5 experiencr v'i h Arthur Anderscna. Arthur Andersen's extensive framing program
provides them with undrrctanding of the lecdmica! auditing and accmmhng requirements and
also with the pontes of the gorwrnment sector
ARTHUR ANDERSEN '
FAQ 20 1
CITY OF FAYETTEVILLE
ENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
Calvin E. Webb, Engagement Partner
Calvin, as engagement partner, will direct the City's audit service and will be
directly responsible for all other professional services provided to the City.
Calvin is a partner with Arthur Andersen and has 14 years experience with
particular emphasis in the public sector industry, including various
engagement responsibilities for.
• City of Fort Smith, Arkansas
• City of Mesquite, Texas
• City of Lewisville, Texas
• City of Mansfield, Texas
• City of Richardson, Texas
• City of Bedford, Texas
• City of Farmers Branch, Texas
• Garland Independent School District, Texas
• Dallas Independent School District, Texas
• Dallas/Fort Worth International Airport
• Tarrant County, Texas
• Dallas Area Rapid Transit
• Dallas County Community College District
Calvin has provided assistance to government clients on a variety of projects,
including a review of fixed asset records, cash management studies, audits of
federal, state and local grants, and efficiency and productivity reviews.
Calvin joined the firm after graduating from Texas Tech University. He is a
frequent speaker and participant in various GFOA and other regional state
and national government meetings. He serves as a reviewer for the GFOA
Certificate of Achievement for Excellence in Financial Reporting Review
Program.
' Calvin has instructed or attended more than 150 hours of professional
training in the past three years, including courses on government operations
and accounting. His considerable government experience enables him to be
one of our primary government instructors. In addition, Calvin is a member
of the Texas Society of CPAs.
IARTHUR ANDERSEN -
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CITY OF FAYETTEVILLE
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ENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
EVedenceWilliam B. Dillon, Engagement Adviser, Audit
Competence, and During his 29 years with Arthur Andersen, Bill has devoted substantial
Capac ;/v for, professional time to government and not -for-profit clients, including serving
ti as Arthur Andersen's Southwest government services practice director.
Pertonnnance
Recent audit and consulting project experiences include:
• City of Fort Smithy Arkansas
• City of Dallas, Texas
• City of Houston, Texas
• City of Richardson, Texas
• City of Mansfield, Texas
• City of Mesquite, Texas
• City of Ler+2sville, Texas
• City of Farmers Branch, Texas
• City of Irving, Texas
• Garland Independent School District, Texas
• Dalias Independent School l)istrct, Texas
• Irving Independent School District, Texas
• Dallas Area Rapid Transit
In addition to this experience, Bill has had engagement responsibilities for a
variety of other public sector engagements including the Texas Cities of
Carrollton, Fort Worth, Denton, Weatherford, Arlington, Piano and
numerous other municipalities.
Bill is a frequent speaker and participant in various GFOA and other
regional, state and national government meetings. He serves as a reviewer
for the GFOA Certificate of Achievement for Excellence in Financial
Reporting Review Program. Bit also has instructed or attended
approximately 150 hours of professional training in the past three years. In
addition, Bill is a CPA in the State of Texas and a member of the Texas
Society of CPAs.
ARTHUR ANDERSEN I I
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CITY OF FAYETTEVILLE
ENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
Jim Downs, Engagement Advisor, Audit
Jim is a partner in our Tulsa office. He joined the firm in 1974, following the
completion of his MS degree in accounting from Oklahoma State University.
He has worked in Arthur Andersen's Bogota, Colombia office and specializes
in oil and gas, litigation support, and not -for-profit.
Recent project experience includes:
• Philbrook Art Museum
• Vintage Petroleum
• Transok
• Occidental Petroleum
Jim also serves the community, having served as president and treasurer of
both the Women's Treatment Center and Resonance. He is also a member of
the Board of Hillcrest Associates, the Summit Club, and the Tulsa Zoo
' Friends. In addition, he has participated in the Leadership Tulsa Program, as
well as in other civic affairs in Tulsa.
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CITY OF FAYETTEVILLE
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ENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
Experience, Thomas F. Ellis, Engagoiwnt Advisor, Computer Rssk Manageine".t
Competence, and Tom is the partner in charge of the Computer Risk Management practice and
Capacity as for hover if years experience in financial fraud investigation, application
Performance control reviews, systems control design, and disaster recovery and
contingency planning consultation.
Recent project experience includes:
• University of Arkansas
• Qty of Dallas, Texas
• City of I.ewisville, Texas
• City of Richardson. Texas
• City of Farmers Branch, Texas
• Garland Independent School District, Texas
• 1)al:as Independent School District, Texas
• Dallas Area Rapid Transit
• Dallas County Community College District, Texas
• Education Sen ice Center Region :0
Tom has been a frequent speaker on issues of computer crime, security and
systems development for various professional organizations, such as the
Texas Society of CPAs, National Association of Accountants, EDP Auditors
Assodaton, and Association for Systems Management.
Tom received a bachelor of science degree in accounting from Oklahoma
State University. He is a CPA in the State of Texas, a Certified Information
Systems Auditor, a member of the AICPA, past -president and director of the
North Texas Chapter of the FDP Auditors Association, and has served as a
member of the Research Advisory Committee of the EDP Auditors'
Foundation Tom has instructed or attended approximately 150 hours of
professional training in the past three years.
ARTHUR AT-DERSUc t
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CITY OF FAYETTEVILLE
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ENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
Mike Travis, Engagement Advisor, Business Systems Consulting /�,�Ei erience,
Mike is the Director of the Dallas Business Systems Consulting (BSC) Corn eLe11ce, and
Practice. BSC specializes in providing system evaluation, selection and r n nin, io.
implementation services to small and medium-sized organizations, utilizing �VI
packaged and yptom software running on minicomputer and Local Area P PrfOI'mance
Network platforms.
Mike has over 19 years experience in information technology consulting and
financial/operations management, including 13 years with the firm and six
years in industry where he was a V.P. of MIS and president of a software
development company. His specialties include assisting clients with
development and implementation of downsizing strategies for productivity
improvement and cost reductions.
Representative clients include:
• City of Grand Prairie, Texas
• City of Houston, Texas
• Garland Independent School District, Texas
• Carrollton -Farmers Branch Independent School District, Texas
• Grayson County, Texas
Mike is a licensed Certified Public Accountant, and a member of the
American Institute of Certified Public Accountants, and the Texas Society of
Certified Public Accountants. He has served as an instructor at Southern
Methodist University and the University of Texas at Austin.
Mike earned a Bachelor of Business Administration in statistics &
quantitative methods and an Master of Business Administration in finance
from the University of Texas at Austin. In addition, he has instructed or
attended approximately 150 hours of professional training in the past three
years.
ARTHUR ANDERSEN
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CITY OF FAYETTEVILLE
ENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
Experience, Bruce Bernstien, }ngagemenl Advisor, Tax
Competence, and Bruce has been with Arthur Andersen for over 16 years and specializes in
C,•. •,•w f0r government and not -for-profit organizations. Brace is the head of the Tax
Performance
f Exempt Financing Practice. Bruce's experience in serving the government
Performance and not -for-profit sector has included consulting on arbitrage issues and
rebate services, consulting on corporate sponwrships, fund-raising,
employee/ independent contractor status, employment tax issues, unrelated
business income reviews, and general compliance issues.
Bruce serves as the tax partner for a number of government and not -for-
profit clients including:
• City of Fort Smith, Arkansas • Jewish Community Center
• City of Lewisville, Texas of Dai'as I
• City of Richardson Texas • Viemam Veterans Memorial
• Garland LSD, Texas Fund
• Cotton Bowl Athletic • Southwestern Medical School
Association Foundation
• Children's Cancer Fund • St Mark's School of Texas
• The Crustal Charily Ball • State Fair of Texas
• Dallas World Salute • Federation of American Health
• Young Audiences of Systems
Greater Dallas • Order of the Eastern Star
• University Medical Park
Bruce is a Certified Public Accountant and received his BBA in accounting
from the University of Texas. lie also received a JD from the University of
Houston and an LLM in taxation from Southern Methodist University.
Bruce s a member of the American Institute of Certified Public Accountants, I
the Texas Society of Certified Public Accountants, and the Real Estate
Financial Executives Association.
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CITY OF FAYETTEVILLE
IENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
Ben Kohnle, Engagement Manager
Ben has been with Arthur Andersen for approximately seven years and
has extensive experience in the public sector. He received a bachelor's
degree from Texas Tech University.
Ben has more than six years of experience in serving government clients.
Recent projects include:
• City of Ft. Smith, Arkansas
I. City of Richardson, Texas
• City of Mansfield, Texas
• City of Lewisville, Texas
• City of Mesquite, Texas
• City of Farmers Branch, Texas
• Dallas Area Rapid Transit
' Ben has provided assistance to government clients in a variety of projects,
including cash management studies, audits of federal, state, and local
grants, and efficiency and productivity reviews.
Ben is a speaker and participant in various GFOA and other regional and
state and national government meetings. He also teaches many of our
government training programs, and participates in the GFOA Certificate
of Achievement of Excellence in Financial Reporting Review Program.
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CITY OF FAYETTEVILLE
ENGAGEMENT PARTNER, MANAGER, AND STAFF I
QUALIFICATIONS AND EXPERIENCE
Experience, Shelley Kieffer, Sento•-rn-Owrge
Competence, and Shelley is an in -charge with Arthur Andersen and has approximately three
Capacity for years experience in the public sector Recent experience includes
Performance • City of Duncanville, Texas
• Cih- of Lewisville, Texas
• Fijer Industries '
• Clayton Wilhams Energy
• Dais%tek, Lnc.
Shelley joined the fine after graduating from Texas A & M University with a
bachelors degree in accounting. She has attended more than 200 hours of
professional training in the pas: two years, including courses cn government
operations and accounting. Shelley's experience also includes performing
GFOA review s and single audits. '
Amy Dozier, Swum-in-Charyr=
II
An -v is an in -charge with Arthur Andersen and has approximately two years
experience in the public sector. Recent expenence includes: I
• City of Lew9sv iLe, 1 exas
• W. A. Creswell Foundation
• Alcatel Network Systems
• Henry Silverman Jewelers
• The Hote; Industry Switch Company
Amy ]Dined the firm after graduating from Texas A & M University with a
bachelors degree in accounting She passed the CPA exam in November 1992
and has attended more than 200 hours of professional training since starting
with the finn. Amy's experience includes assisting in the preparation of
Comprehensive Annual Financial Reports, participation in the GFOA review
program, and performance of single audits.
ARTHUR ANDERSEN
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ENGAGEMENT PARTNER, MANAGER, AND STAFF
QUALIFICATIONS AND EXPERIENCE
Our Policy on Staff Rotation
We understand how important it is to our clients to have continuity in the
'personnel who perform the audit from year to year. Arthur Andersen's
policy on rotation is to maintain continuity in the leadership positions.
Our history of turnover is comparable to other firms in the profession. Most
of our personnel look at Arthur Andersen as a long-term career. We have
taken important steps to provide our people with long-term challenges and
career opportunities and to enable them to balance their professional and
personal lives.
Our record of maintaining continuity on engagements has been very high. In
addition, having over 50 skilled professionals in the government practice
means that, should the need arise to replace one of our team members (due
to uncontrollable factors such as resignation, etc.), our service will remain
consistent and superior, as well as allow us the necessary resources to ensure
completion of the audit work by the due dates.
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CITY OF FAYETTEVILLE
PEER AND PUBLIC REVIEW ,
Prior to the AICPA's requirement that accounting firms undergo a peer
G�I IG'I I r review, we voluntarily participated in such a review. We have had peer
Competence, and reviews conducted by another independent accounting firm, every three
_ _ _ _ 1 _ t_r years since 1977, and have received unqualified reports on the quality of our
(�wevty for
practice and control procedures each time.
Perfomianae
Arthur Andersen is the only accounting firm to have a Public Review Board.
The Board's principal responsibility is to evaluate whether our firm's policies
and practices promote the public interest. The Board is comprised of eminent
educators, business leaders, and former government officials from around the
world, and performs an independent oversight function for our worldwide
organization. I
Refer to Back of Proposal for
Copy of Peer Review Report
We have performed Single Audits in accordance with the Single Audit Act of
1984 and OMB Circular A-1213 for a majority of our clients, and have been
subjected to desk reviews and field reN news by various cognizant agencies in
connection with our Single Audits. These audits gave us favorable reports
and comments on the quality of our work We have not been subject to any
disciplinary actions as a result of the above -mentioned desk and field
reviews.
We are not aware of any disciplinary aclion taken or pending against the
Dallas or Tulsa offices during the past three years with. any state regulatory
bodies or professional organizations.
ARTHLA ANDERSEN ' I
PACE 30
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CITY OF FAYETFEVILLE
SPECIFIC AUDIT' APPROACH
In this section, we will summarize our understanding of the City's audit
requirements and discuss our plan for performing the audit of the City.
Scope of Services
Our audit will be performed in accordance with generally accepted auditing
standards established by the American Institute of Certified Public
Accountants and the AICPA Audits of State and Local Government Units,
and will be designed to enable us to express an opinion as to the fairness of
presentation of the financial statements of the various funds of the City as of
December 31, 1993,1994,1995, and 1996, and for the years then ending. In
performing our audit, we will use the statements promulgated by the
Governmental Accounting Standards Board. In addition, our audit will be
conducted in accordance with the Standards for Audits of Governmental
Organizations, Programs, Activities, and Functions (1988 revision) and the
Uniform Requirements for Assistance to State and Local Governments —OMB
Circular A-102.
Our audit of the City's grant activities will be performed in accordance with
the Single Audit Act of 1984, the President's Office of Management and
Budget ("OMB") Circular A-128, the OMB compliance supplement for single
audits of state and local governments, and the standards set forth for financial
audits in the U.S. General Accounting Office's Government Auditing
Standards. Accordingly, based on the Single Audit Act of 1984, OMB Circular
' A-128, the GAO Standards and communications with the City's cognizant
agency, we will select necessary procedures to test compliance and to disclose
non-compliance with specific laws, regulations and controls.
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PAGE 31
CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH
Proposed Method Submission of Reports
of Performing Audit We understand that w e wilt be required to issue the following reports:
• The City's genera] purpose financial statements included in its
Comprehensive Annual Financial Report ("CAFR"). We are also to
provide an "in -relation -to' report on the combining and individual
account group financial statements and supporting schedules. A
draft of these statements, the CAFR w6]1 be provided to the City by
May 15 of each year. Additionally, 150 copies of the general purpose
financal statements. included in the CAFR, will be provided to the ,
City and the GFOA by June 15 of each year.
• A management letter that explains weaknesses or approaches for
improvement in the City'c operations and procedures as a result of
our evaluation of the City's system of internal accounting control
along with reportable conditions. Arthur Andersen will promptly
advise the Mayor in writing if conditions are discovered which lead
to the belief that material errors, defalcations, or other irregularities
may exist, or if any other circumstances are encountered that require
extended services A draft of this letter will be submitted for review
by the City before finalized, and fifty final copies will be provided to
the City prior to June 15 of each year.
• The schedule of federal financial assistance, "in -relation -to" the
genera] purpose financial statements. the City's compliance at the
financial statement levei with applicable laws and regulations,
compliance with general requirements applicable to federal financial
assistance programs, compliance with specific requirements
applicable to major federal financial assistance programs,
requirements applicable to non -major federal financial assistance
programs, internal accounting and administrative controls used in
administering federal financial assistance programs, and a report on
fraud, waste, abuse or illegal acts (or indications of such acts), if
necessary.
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CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH
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Reporting to City Management
We will ensure that the appropriate City management and City Council are
informed of each of the following:
• The auditor's responsibility under generally accepted auditing
standards
• Significant accounting policies
• Management judgments and accounting estimates
• Significant audit adjustments
• Other information in documents containing audited financial
• Disagreements with management, if any
• Management consultation with other accountants
• Difficulties encountered in performing the audit
Proposed Utilization of City Staff
We anticipate the utilization of appropriate City staff to assist us in the
coordination of interviews, preparation of client prepared schedules, the
locating of various documents to assist in the audit process, and assistance
from the internal audit department, the level of which will depend on a
mutually agreeable arrangement between the City and Arthur Andersen. We
would anticipate using the City's internal audit department in the specific
area of Single Audit as well other significant audit areas including cash and
investments, debt service, general long-term debt, capital projects, and
general fixed assets. Also, in connection with the execution of our audit, we
anticipate utilizing certain computer -based data to facilitate our work This
will require malting available certain data files for our use, which we
anticipate will require a minimum amount of both machine and operator
time.
, M a
IPACE 33
CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH ,
Proposed Method Philosophy of Quality
of Performing Audit Our professional services are related, in the broadest sense, to the financial
and accounting aspects of our c ier.t's affai s. Our objective is to pmvide
sound, practical business solutions to our client's accounting, reporting and
related business requirements. We have a reputation for professional work of
the highest quality and standards of service that are second to none. Because
our approach has always been to customize our audit programs, they are
responsive to the needs of the internal control systems used by the City. We
will modify our audit approach to meet changing circumstances and
continually provide a fresh and objective look.
Our philosophy is to measure success by the qua:ity of our service. The
cornerstone of our service is a business approach executed by competent
people working in anenvironment that fosters innovation. We then measure
our results by the qua:ity of our contribution. Most firms claim to use a
business approach to auditing, which is essentially understanding each
client's business and the industries in which that chant operates. We
pioneered the use of this business approach over a hall century ago. In 1936,
Arthur Andersen ht-nse'! delivered a message that is as important today as it
was then:
" WYe arc gnntg !o lam' tin C,C.5 Cs of cc'nlpetiti(nfrvm now on, We ,
are going 1:, haye, ,Rrst, comp•tih in from the re,uerne hsve of
aulirng firm:. From that point of r Teti ur ti -ill hate no adt'cntagt's
against anybody else... The sc: mu! hrpe of aude!mg firm is the one
ilwt will do sonrething more than routine auditing. We u+int to
belong tc that second class of Frm inhere we can measure our ,
connnbution more by the auai=ty of the scrric.e ye render than by
whether we are making a gcxxd Inang out of i1. If we Jet ourseh'es ,
become routine audrtcrs, I unuld retire so fast that you could not
hear nrg heels as I got u! of this office. That holds no interest fen
nu, none u'hatsa-rr
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ARTHUR ANDERSEN ,
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CITY OF FAYETTEVILLE
SPECIFIC AUDTT APPROACH
Business Approach
The ability to provide a successful business approach lies not in a rigid
methodology but in the commitment, concern, and competence of those who
perform the work. This is where we traditionally have placed our emphasis—
' on careful selection and continual training of the men and women who serve
our clients and who will serve the City.
Management Letter
' We regard the management letter to be one of the most important services to
our clients and consider the development of quality recommendations to be
an integral part of each year's audit. This letter explains weaknesses or
approaches for improvement in the City's operations and procedures as a
result of our evaluation of the City's system of internal accounting control
along with reportable conditions. Arthur Andersen will promptly advise the
City management and/or the City Council if conditions are discovered which
lead to the belief that material errors, defalcations, or other irregularities may
exist, or if any other circumstances are encountered that require extended
services. In addition, the thorough understanding of the City's operations and
controls which we will acquire provides the basis for making meaningful
recommendations to the City.
We do not view our management letter as a "report card" but rather as an
opportunity to provide value to our clients and to use our government
industry skills in a constructive manner.
Communication
Open and effective communication between Arthur Andersen and City
management is a key element of our audit approach We will meet with
appropriate management personnel at critical times throughout the audit,
including both an entrance and exit conference, emphasizing year-round
communications with City management.
iThe audit plan and timetable will be discussed prior to commencement of
audit work to ensure completion of the audit within the specified guidelines.
' We win provide the Citya list of all work papers and schedules to be
prepared by the City staff on or before November 1 of each year. The results
of our work, the status of the audit, financial reporting concerns, and
' ARTHUR ANDERSEN
IPAGE 35
CITY OF FAYETTEVILLE ,
SPECIFIC AUDIT APPROACH 1
Proposed Method recommendations for improvement of internal control techniques will be '
��+ communicated to appropriate City management personnel throughout the
of Performing Audit year.
During the audit fieldwork, we will have weekly status meetings with the
City. We have found that these meetings ensure timely communication and
resolution of audit issues.
Our Plan for Transition
Completing a smooth, trouble -free transition of auditor responsibilities
requires sensitivity to requests made of your accounting staff and
management, and to the potential of disrupting your ongoing operations.
Arthur Andersen has participated in the auditor transition process numerous
times. We believe this factor, coupled with our knowledge of the City and
our extensive government audit experience, will provide for a smooth
transition with minimal diruption to accounting staff and management.
In our transition work, we will review the City's accounting procedures and
systems of mternai accounting controls This review will approximate
100 - 150 hours.
It is our policy to absorb the cost of the review. This commitment reflects our
desire to build a long-term relatonship with the City.
The following is a sample of engagement. that we have recently successfully
transitioned:
O Dallas Independent cchtvl District
Contact Matthew Harden, Budget and Finance Management
214) 84:-4:49
O Dallas Cony Community College District
Contact: Ted Hughes, Vice Chancellor of Business Affairs
(214)324-7701
O Dallas Area Rapid Transit
Contact: Chris Poinsalte, Chief Financial Office:
(214) 749-3:48
ARTHUR ANDERSEN '
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CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH
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Risk -Oriented Approach
Our overall audit approach begins with establishing goals of efficiency,
effectiveness, and client service. We then apply a risk -oriented approach to
the audit process, as outlined below.
Our audit procedures will be designed to direct our maximum audit effort to
the areas where the greatest risk of material errors or irregularities exist, i.e.,
because of deficiencies or weaknesses of procedures and controls, and to
minimize our effort in well -controlled areas.
The first step in identifying areas that pose the greatest risk of material errors
is to identify departments/functions that have the highest activity level, such
as volume of cash receipts, amount of expenditures, number of personnel,
number of transactions, etc. We would identify these areas by performing
detailed reviews of the City's budget and related materials, organizational
charts, manuals and programs, and financial and other management
information systems.
PACE 37
CITY OF FAYETI'EVILLE
SPECIFIC AUDIT APPROACH
PropOsed Method Based upon our analysts of the Cihy's 1992 operations per review of the
`' we found:
of Performing Audit
Revenues (in millions)
14
121 '
]0'
S.
6;1
4. 77/,
,
1.
Q
—
a, —
M'.se• A Srwr Stln 7..\ Cc: Ivrrf `\rt*Y-W Oth:
Frac6 r Ftluun
Unarm
P.opeT
Smxr Pn .'nr'a! (n.vm.rtrnW
'a.e• tied
Frnin,
Tan
Expenditures/Expenses
(in millions)
9
N I I
7-
6"I
I.
3-'
I
2- I .�
iII LI oJ
Jnnntl'S.- C¢.Y Rt, AEnrtai_j waa M1 pwt . 'sc gc I%tw O.M ROQar)
R elcrIth. •Fn bn'r Sum Smss Mxl >apn+, Tnssn Smt• :.rrvmn� Rmtl
Il'r. &r. flwmmrei R\n
ARTHUR ANDERSEN
l'AC.F 38
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CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH
The second step is to identify specific areas where the greatest amount of risk Proposed Method
exists due to the nature of the transactions, such as construction activity, self-
insurance, "I
arbitrage, etc. Of Pe/ fo1 wing Audit
Accordingly, we expect to perform detailed audit work (such as one-on-one
interviews with City officials and other appropriate personnel, observation
and testing of internal control procedures, confirmations, etc.) in the
following departments/functions as outlined in the City's organization chart
• Accounting
• Purchasing
• Data Processing
• Municipal Court
• Personnel
• Public Works
As part of the one-on-one interviews with the major departments, we would
focus our attention on a number of areas that might be applicable to each
department, such as:
• Cash receipts and disbursements activities
' • Purchasing activities
• Communications with other applicable departments
• Data processing activities
' • Compliance with laws and regulations
Prompt Payment Act Municipal Court and Police Department, Act
Purchasing regulations 332 of 1977
Bidding regulations Bonding of Municipal Officers and Employees,
Investment policies and procedures Act 338 of 1955 and Act 677 of 1975
' Construction activities - Improvement contract over $10,000, Act 159 of
Debt covenants 1949
Specific requirements in accordance - Budgets, Purchases over $2,000, Payments of
' with OMB A-128, such as: political Claims, etc., Act 28 of 1959
activities, cash management, civil Investment of Public Funds, Act 273 of 1943
' rights, financial reporting, etc. and Act 106 of 1973
Municipal Accounting Law, Act 159 Deposit of Public Funds, Act 21 of 1935, Act 57
of1973 of 1945 and Act 107 of 1973
Refer to Appendix I for a partial list of audit procedures we would perform
in connection with the City of Fayetteville audit.
' ARTHUR ANDERSEN
PAGE39
CITY OF FAYETTEVILLE
I
SPECIFIC AUDIT APPROACH
Proposed Method Overview of Our Approach
Audit
approach to auditing the financial statements of each of our clients is
oIs F"'��ormingAudit tailored to match specific needs and circumstances, utilizing a "topdown"
methodology. I: begins by reviewing with management the business plan for
the year, changes in management responsibilities and changes in controls.
Next, we make an assessment of the financial operating and control cycles to
determine which areas should receive major emphasis. The areas which
require emphasis are those which we define as key risk areas, meaning that
the potential for an adjustment to the financial statements may exist. Finally,
we evaluate these key risk areas in establishing the overall scope of our audit
testing.
In order to provide the most efficient sen'ice to the City and address all issues
arising from the audit, all members of the audio team, including the
engagement partner, will be involved in each phase of the audit.
Our audit approach is depicted in the adjacent chart and discussed in detail in
the following pages. The estimated hours by segmentation of work are
estimated below:
First rime Through 100 - 15C
Pia.. mx.g 150-2t
Conducting Audi: Tests
Preliminary 175-2W.]
Final 425 -4Th
Communicating Resu]t. 150- 175
Our timetable for completing the various phases of the audit is shown on the
chart and fits within the timetable set forth by the City.
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ARTIR R ANDERSEN
PAc:r 4C '
CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH
A Schedule Which Meets Your Requirements Proposed gtjjctj
This chart illustrates the overall timing of our work We commit to the specific of Performing Auld
dates as outlined in your request for proposal.
Summary of Audit Plan
AUG
SEPT
0Cf
APRIL MAY
JUNE
Overall
Specific
Compliance
Substa Live
Reporting
Control
Risk
Testing
Testing
Environment
Analysis
•
Review of Trial
•
Determine Reliance on
Balances
Financial
Controls
•Analysis
of Account
CpI+R
Reporting
•
Journal Entries
Balances
• EDP Controls
•
Functional Classification
•
Financial Statements
• Management
•
Water and Sewer
•
Water and Sewer
Controls
Revenue
•
Property Taxes —
•
Property Taxes
•
Allowance for
• Asset
•
Accounts Receivable
Doub
Safeguards
Receivable
• Financial
Personnel/
•
Salaries and Wages _
•
Accrued Expenditures
it
Planning and
Payroll
•
Employee Benefits
Idler
Budgeting
• Business and
•
Accounts Payable
Environmental
•
Expenditures
•
Accrued Expenditures
Factors
��
•
Prepaids
•
Cash
•
Debt
Terry/
•
Cash Processing
•
Investments/ Collateral
Financing
•
Interest income
•
Debt Service
A -US
Single Audit
Repoli
Asset
•
Capital Expenditures
•
Property. Plant and
Accounting
•
Inventory Observation
Equipment
•
Materials and Supplies
PAGE 41
CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH
•rr�-r "I..
General Risk Analysis
In General Risk Analysis, we review strategic planning and budgeting, as
well as the financing and control function, to document the nature of the
City's planning prcx'esses and to obtain an overview of the inlemal control
environment in which the City operates As an example, we take a top -down
look at your financial position at the City. Through our knowledge of current
events in City government, we determine where the significant risk of
financial misstatements might be and pan our work to address such risks.
Key areas of focus for the City include the following:
• Financial planning and budgeting process
• Financing issues
• EDP environment
• Self-insurance
• Corstructior.
• Investments/coliateralization
• Water and Sewer operations
Coordination with the City's Internal Auditor
We will work closely with the City's Lnw nal Auditor in developing our plan
to take full advantage of the results of her work, where appropriate, and to
avoid the cost and frustrations associated with unnecessary or redundant
work. At the beginning of cur transition. work, we will review the City
Internal Auditor's plans and examine in detail the results of past projects. At
the same time, we will review our preliminary audit plan with the City's
Internal Auditor and work out an appropriate division of audit tasks.
Periodically, we will meet with the City's Internal Auditor to review her work
in support of the external audit and to assure that her work and ours remain
on schedule
ARTHUR ANDERSEN II
PAGE 42
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Transactional Flow Analysis
We then update our Transaction Flow Reviews — detailed studies of internal
accounting controls over a particular category of transactions. We categorize
activities that have an economic impact on your operations by transaction
cycles.
• Revenue
• Property and equipment
• Expenditure - vendors
• Expenditure - payroll
• Federal and state financial assistance programs
• Treasury/financing activities
This, combined with becoming familiar with the City's organizational
structure, helps us assess risk more accurately and gives our personnel a
better understanding of the City's operations and its overall accounting
process. We perform these Transaction Flow Reviews in order to obtain
information about
• Transactions and functions performed within each cycle
• The control techniques the City uses to prevent, detect and correct
' irregularities
EDP Review
Like many large corporations, the financial accounting and reporting system
the City uses is heavily dependent on information processing. Because of the
' significance of electronic data processing to daily operations, the City needs
some assurance that data processing controls are adequate and operating
' effectively. When a computer system is involved, our new approach
combines the manual and computer phases of a review and evaluation of
internal accounting controls. It also provides an integrated method of
' establishing an audit scope based on the risks in the business and control
environment of the system. Our approach enables the audit team to develop
an appropriate balance of manual and computer -assisted compliance and
substantive tests. See page 18 for additional discussion regarding EDP.
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CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH '
ProposedMethod Specific Risk Analysis
of Performing Audit The next step, Specific Risk Analysis, consists of an evaluation of controls.
Annually, we make a structured evaluation of the effectiveness of the control
techniques against specific internal control objectives and revise our audit
plan as appropriate. In completing this critical process, we do not use a
me(hanical checklist approach, which can become quickly outdated and does
not provide a meaningful understanding of your organization. Instead, we
use broad aitena to evaluate whether the existing control techniques
accomplish predetermined control objectives and minimize risks created by
insufficient, inoperative or absent controls. This approach requires finding
the answers to questions such as "What could go wrong?," "How could it be
prevented'," and "Would it be detected?"
Compliance Testing
We perform the next step — Comp:ialm Testing — for those control
techniques on which we plan to rely We evaluate whether each control
technique is effective.
A good example of our compliance testing is the work we perform on ,
disbursements made throughout the year. Using microcomputer tools we
tit•:ec: a statistical random sample of checks written. We test these
disbursement to ensure that proper controls have been followed. This
includes determining if the payment is supported by a vendor invoice, the
disbursement was properly approved and recorded, and, for disbursements
charged to federal or other restricted programs, that it is an "allowable"
expenditure.
Substantive Testing
Substantive Tests are procedures we perform to detect misstatements in
financial statement balances. In general, substantive testing can involve direct
confismalion with banks, grantors, vendors, investment managers and
attorneys, predictive tests, vouching of additions to fixed assets, observation
of inventories, and similar procedures. We design substantive tests to reach a
conclusion with respect to an account balance. We use substantive testing
where compliance testing discloses that existing controls are not effective or
where substantive testing is a more cost-eftective audit procedure.
AR'rHVR ANDERSEN ,
PAGE 44
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SPECIFIC AUDIT APPROACH
' Use of Statistical Sampling
' We believe statistical sampling could be used effectively, particularly in the
payroll, cash disbursements and receipts, and utility billing areas. We would
expect our sample size to approximate 50-100 items for each area. Our firm
' has conducted and documented significant amounts of research regarding
statistical sampling and the applicability of the various statistical techniques
to the phases of our audits.
Through this research and through experience with statistical sampling in
our fieldwork, we have found that, while sampling cannot substitute for
sound judgment and business sense, it can augment our decision -making
process and materially reduce the amount of work required to reach the final
audit conclusions. Therefore, we have selectively integrated several attribute
and variable sampling techniques into our auditing process.
1 Our firm has developed a computer software package, WINSAMPLE,
specifically for audit sampling applications. The features of this package
include determination of the most effective sampling methodology,
estimation of required sample sizes, calculation of statistical results, and
random number generation.
' Availability of Workpapers
' We agree to retain all working papers and reports fora minimum of three (3)
years, unless we are notified in writing by the City of the need to extend the
retention period. In addition, a copy of the audit working papers will be
'
presented to the City at the completion of the audit, but prior to final
payment. We will not dispose of working papers and reports without the
written consent of the City.
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IPACE 45
CITY OF FAYETTEVILLE
SPECIFIC AUDIT APPROACH
Proposed Method Single Audit Plan
of Performing Audit Overall Approach
The single audit section of our audit plan encompasses the work necessary for
us to comply with the requirements of OMB Circular A-128 and the A]CPA
guide, Audits of State a'th Local Gcmeniments, and to issue the five related
reports. Our single audit work will be performed in three phases: Planning
and Risk Assessment, Prel:rrina,-v, and Final fieldwork as detailed below.
Planning and Risk Assessment
The objective or our Planning and Risk Assessment phase is to gather
information to formulate our audit approach. This is achieved by meeting
with the City's management, reviewing prior year workpapers, evaluating
the results of any Federal or State agency audits, and preparing ping
documents. '
Our di.cu sion with management provides us with curent issues relevant to
the Single Audit of the City. Our planning documents, specifically the I
Genera] Risk Analysis, Audit Scope Summary and worlcprograms, focus on
the key issues relevant to the audit of the City's federal and state programs.
As part of our General Risk A.nah•sis, we discuss current events and issues,
our overall scope of work and single audit approach, and coordination and
timing. Finally, our workprograms describe in detail the specific audit steps
we will fotow to test the (:ity's compliance with Federal and State laws and
regulations Together these planning documents support our detailed review
and testing performed during our preliminary and final fieldwork
Preliminary Procedures
Our preliminary fieldwork consists priman:v of tests to determine that
accounting and administrative controls are in place and working, federal and ,
state mpendihues and receipt. are fairly presented and laws and regulations
havebeen complied with. Because our testing focuses on these areas, we can
perform the majority of our fieldwork during a preliminary stage. Review
and testing of accounting controls applicable to the City are performed in
connection with the financial statement audit and we rely on this work for
purposes of the single audit. Review and testing of administrative controls,
teats of compliance with laws and regulatons, and fairness of presentation of
ARTHUR ANDERSEN '
Pac.i 46
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ISPECIFIC AUDIT APPROACH
' the capital projects are tested as part of the Single Audit. Administrative
controls are those controls which are specified in OMB circulars and the
' OMB Compliance Supplement and are, in part, based on federal laws and
regulations (such as the Davis -Bacon Act, Civil Rights Act, etc.). Our audit
work includes a review of the control system, coupled with testing of selected
• ' transactions to determine compliance with program requirements. We will
utilize nonstatistical sampling in this phase of our work in order to
objectively select the minimum number of transactions that will permit us to
' form conclusions on the effectiveness of the administrative controls. This
testing requires direct contact with the other key departments at the City.
In order to ensure fair presentation of program expenditures, statistical and
judgemental sampling is performed. Our overall disbursement testing is
' likely to pick certain expenditures associated with the City's federal and state
programs. However, we also perform judgemental testing on a few selected
transactions as discussed below.
1 Final Procedures
Our final fieldwork focuses essentially on tests of capital expenditures,
including labor, indirect costs, etc. However, we also perform some tests of
compliance with laws and regulations that are more feasible to complete at
'
the final stage (e.g., grant closeout procedures, A-87, etc.). For our tests of
capital expenditures, we will select a sample of invoice and direct labor
' charges utilizing our firm software. In addition, we will perform certain other
tests of capital expenditures, as needed, to determine compliance with
federal and state laws and regulations.
' A major part of the final procedures is the review of the Schedule of Federal
and State Financial Assistance and drafting of the single audit findings. We
'will work closely with the City to ensure that the single audit report contains
complete and accurate information on the grant schedule and in the findings.
1
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Proposed Method
of Perfonning Audit
IPAGE 47
CITY OF FAYETTEVILLE
BENEFITS TO THE CITY '
ftposes j M od Our approach toward the City audit results in a number of benefits. '
of� re! ffoRf�?�ing Audit can preh nsive Audit — The City is a complex operation. Our audit
approach is designed to cover its wide variety of activities. ,
• Efficient and Ef ictizr Audit — We are well acquainted with the
practices and procedures of governmental entities. This win not only
enable us to perform our audit work more efficiently, but it will also
greatly reduce the time your personnel will need to spend teaching
the auditors your procedures. Our experience and insights will also
enable us to be more effective in ensuring that important areas will
not "slip through the cracks."
• Fresh Perspectizr— Our professionals offer you a fresh perspective,
which will foster new ideas and insights about the City's operations.
• Obrec av Assessmcni! — As independent outsiders, we can provide
City management and the City Council with an objective assessment
of the City's financial reporting, internal controls and other areas of
concern. ■
• Trusted Buvwss Advisors — We view our role as more than just
auditors of financial statements. With our business approach to
auditing and our experiences with similar organizations, we are
another resource management you can call upon to solve your
business needs.
• No Surprise! Our open communication and up front planning will
ensure that the City will not have any unpleasant surprises,
ARTkiuR ANDERSEN
PACF48
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CITY OF FAYETPEVILtE
ANTICIPATED POTENTIAL AUDIT EMPHASIS AREAS
As previously discussed on page 35, Arthur Andersen feels that open and Proposed Method
effective communication with the City is a key element of our audit approach. 11'"'`"'`"'`"'`"'
This is accomplished by meeting with the City year-round rather than just at of Performing Audit
' year -eat In addition, we anticipate having weekly status meetings
throughout the course of the audit to discuss the results of our work, the
status of the audit, and to assist the City in resolving any potential audit
' issues or reporting concerns on a proactive basis. Once selected as your
auditors, we anticipate meeting with appropriate City personnel to discuss
' potential areas of concern to the City. Among other items, we have experience
in dealing with municipalities that are subject to arbitrage rebate regulations
and are familiar with the unique aspects and related footnote disclosure
requirements of the Arkansas Local Police and Fire Retirement System Plan.
Additionally, if any reporting issues or other challenges arise during the
audit, we will discuss with the appropriate City management the resolution
of these issues prior to finalizing any reports.
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CITY OF FAYETTEVILLE
REPORT FORMATS
Proposed Method Arthur Andersen will issue various reports which are classified in three main
categories - Comprehensive Annual Financial Report, Single Audit Reports,
of Performing Audit and Management Letter
Comprehensive Annual Financial Report
The sample format of the Auditor's Report for the Comprehensive Annual
Financial Report is shown at Appendix I.I.
Single Audit Reports
The Single Audit Reports will be in accordance with Statement of Position
92-7 issued by the AK]'A and will be comprised of the following:
For the City as a whole:
• A report on an audit of the general purpose financial statements of
the City as a whole,
• A report on internal accountng control based solely on a study and
evaluation made as a part of the audit of the general purpose
financial statements.
• A report on compliance with laws and regulations that may have a
material effect on the financial statements.
For its federal and state frrancal assistance programs:
• A report on a supplementary schedule of the Cit's federal and state
arancal assistance programs, showing total expenditures for each
federal and state assistance program.
• A report on internal controls (accounting and administrative) used
in administering federal and state financial assistance programs.
• A report on compliance with general requirements applicable to
federal and state financial assistance programs.
• A report on compliance with specific requirements applicable to
manor federal and state financial assistance programs,
• A report on testing applicable to non -major federal and state
financia] assistance programs.
ARTHUR ANDERSEN
PAca 50
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CITY OF FAYETTEVILLE
REPORT FORMATS
• If applicable, a report on fraud, abuse, or an illegal ad, or indications Proposed Method
of such acts, when discovered (a written report is required); "1 �""�
normally, such reports are issued separately. of Performing Audit
Management Letter
We regard the management letter to be one of the most important services
we provide to our clients and consider the development of quality
recommendations to be an integral part of each year's audit The format of
our management letter is designed to provide the City with a workable tool
to implement the recommendations. Accordingly, we design our
management letter in a matrix format that contains the following captions:
• Observations
• Possible Consequences
• Recommendations
ARTHUR ANDERSEN
PAGE51
CITY OF FAYETTEVILLE
II
THE SCOPE OF OUR GOVERNMENTAL SERVICES
PRACTICE
Pa PeIfoI77tanCe Arthur Andersen is a leader in the government industry. In 1992, the firm
• rendered over 2,000,000 professional hours of senior gov
ernment govement clients.
in Governmental The Dallas office has more than. 50 professionals who work in this industry.
Audits A Their experience is illustrated by the representative list of clients we have
served as auditors in the last several years:
Current Clients:
•
City
of For. Smith, Arkansas
• Dallas Independent School
•
City
of Richardson, Texas
District
•
City
of Lewisville, Texas
• Dallas/Fort Worth International
•
City
of Bedford, Texas
Airport
•
City
of Mansfield, Texas
• Genera] Services Administration
•
City
of Mesquite, I exas
• Central Texas Council of
•
City
of Farmers Branch, Texas
Governments
•
City
of Irving, Texas
• Tarrant County, Texas
•
City
of Duncanviile, Texas
• Dallas County Community
•
Garland Independent School
College District
District, Texas
• Dallas Area Rapid Transit
Clients We Have Served:
• City
of Dallas, Texas
• Denton County, l exas
• C:ity
of Fort Worth, Texas
• Irving Independent School
• City
of Plano, Texas
District, Texas
• City
of Weatherford, Texas
• Plano Lnndependent Scholl
• City
of Arington, Texas
District, Texas
• City
of Carrolton, Texas
• Duncanville Independent School
• City
of McKinney, l exas
Dstrict, Texas
• City
of CoppeL', Texas
• Wichita Falls Independent School
• City
of Lancaster, Texas
District, Texas
• Town
of Highland Park, Texas
All of our clients who have participated in and applied fur the Certificate of
Act-devemenr for Excellence in Financial Reporting awarded by the GFOA
have received the honor while being served by Arthur Andersen.
ARTHUR ANDERSEN
PALA 52
CITY OF FAYETTEVILLE
SIMILAR ENGAGEMENTS WITH OTHER
GOVERNMENTAL ENTITIES
The Dallas office has a wide range of experience in serving clients in the
public sector. The following list represents audit clients that we have served
in the last five years, that are similar to your engagement.
Past Perfomsanoe
in Governmental
Audits
Engagement
ffQyr
Leader & Manager
Served
Contact
Phone Number
City of Fort Smith
800-1,000
Calvin Webb
1984 -Present
Kara Bushkuhl
(501) 785-2801
Ben Kohnle
City of Dallas
2,800-3,200
Bill Dillon
1986-1990
Jan Hart
(214) 670-3296
City of Richardson
700-800
Calvin Webb
1979 -Present
Dan Parker
(214)23811144
Ben Kohnle
City of Lewisville
550-650
Calvin Webb
1989 -Present
Claude King
(214) 219-3405
Ben Kohnle
City of Mesquite
550-650
Calvin Webb
1990 -Present
Don Simon
(214) 216-6207
Ben Kohnle
City of Farmers
450-530
Calvin Webb
1992 -Present
Rich Escalante
(214) 919-2515
Branch
Ben Kohnle
City of Mansfield
400-500
Ben Kohnle
1986 -Present
Tommie Johnson
(817) 473-9371
ARTHUR ANDERSEN
PAGE53
CITY OF FAYETTEVILLE
I
INDEPENDENCE
Past Pen fomianee Credentials which allow us to meet your
requirements
in Governmental
Audits We are independent public accountants with respect to the City audit as
defined by the standards contained in the Code of Professional Ethics and
Pronouncements of the American Institute of Certified Public Accountants;
the Rules of Conduct of the State Board of Public Accountancy; the GAO
Standards for Audits of Governmental Organizations, Programs, Activities,
and Functions; and generally accepted auditing standards.
In addition, we verily that we have no interest, and wait acquire no interest,
direct of indirect, financial or otherwise, that will conflict in any manner or
degree with performance of service hereunder. We certify that no one in our
firm has or will have, during the course of the audit contract, any financial
interest under this agreement as an officer or employee of the City. We
recognize hai this proposal is for personal services and cannot be
transferred, ass_gned, or sublet without prior written consent.
Prior engagements with the City of Fayetteville
To he best of our knowledge. Arthur Andersen has not performed any
separate engagements for the City or any of its agencies in the past five years.
Accordingly. Arthur Andersen has no conflict of interest with the City
relative to performing the proposed audit.
LICENSE TO PRACTICE IN ARKANSAS
We affirm that we are independent public accountants licensed in the State of
Arkansas.
ARTHUR ANDERSEN II
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CITY OF FAYETTEVILLE
Listed below are some audit procedures which would be performed on the Appendix
City of Fayetteville audit. This list is not complete as it does not include all /���,^,,//Mf""�
' funds and accounts or all of the procedures which would be applied. It is Audit Procedures
intended only to provide an overview of our understanding of governmental
auditing, the City of Fayetteville, and the approach and procedures used.
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Phases of Work
' Typically our work is divided into three major phases — planning and preliminary, conducting audit tests, and
reporting. An overview of each phase is as follows:
Planning and Preliminary Audit Phase (August — September)
Planning for the 1993 audit engagement will consist of a review of any changes in the City's accounting systems,
' procedures and internal controls and modification of the nature, timing and extent of our audit tests, as necessary.
Conducting Audit Tests Phase (October — April)
We will perform compliance tests of accounting procedures and controls related to cash receipts, cash
' disbursements and data processing input/output procedures to provide reasonable assurance that the controls on
which we plan to rely are being applied as prescribed. We will also prepare confirmation requests and review the
latest fiscal year 1993 financial statements. Other procedures which might be of importanceto the City include:
t • A review of interim financial statements and other reports for unusual items.
• A review of the reconciliation of amounts reflected in the fixed asset system to amounts recorded on the
books.
• A review of any new agreements/contracts entered into by the City.
• The status of preparation of the GFA group of accounts fixed assets records and the nature of the audit
' adjustments which might be required.
• A review of new GASB pronouncements and necessary revisions to the City's CAFR and other reports.
' • A review of the procedures implemented to monitor arbitrage interest earnings.
• A partial listing of our proposed procedures is listed below under 'Partial List of Procedures".
• Perform substantive audit procedures as listed on the following pages.
Communicating Results Phase (May — June)
The reporting phase of our engagement will include a review of the City's Comprehensive Annual Financial
Report for accuracy and compliance with GFOA requirements, as well as preparation of the other reports.
ARTHUR ANDERSEN
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CITY OF FAYE7TEVILLE
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Appendix I — Some operating cycles of the City are most effectively audited on an overall
functional basis. These include the treasury cycle (cash management and
Audit Procedures interfund accounts), the purchasing cycle (cash disbursements and accounts
payable) and the payroll cycle. Otherwise, our approach is to audit each fund
separately. The procedures listed below are organized by operating cycle/
fund to illustrate this approach.
Partial List of Procedures
Cycle/Fund Procedures
General Fund 1. Confrm the current year property tax assessment, recompute tax levy
and perform an overall test of current tax revenue. Recompute yearend
receivable and Deferred Revenue.
2. Review distributions of tax collections to general and debt service funds.
3. Review aged tax receivable accounts to determine the adequacy of the
reserve for delinquent accounts.
4. Confirm sales tax receipts.
5. Confirm utility franchise fees.
Debt Service Fund 1. Review detail of interest payments and examine canceled checks on a test
ba..Ls.
2. Review debt instruments for covenants and ascertain compliance.
Capital Projects Funds 1. Review analysis of construction -in -progress with operations personnel to
assess completeness and proper classification of projects. Determine that
amounts remaining on contracts are properly encumbered-
2. Review detaiL of retainage payable.
Internal Service Funds 1. Test allocation of expenses to other funds.
2. Review analysis of fixed asset accounts and vouch significant additions.
3. Recompute depreciation expense. '
4. Review priced -out listing of yearend inventory and the book -to -physical
adjustment
5. Assess self-insurance program accruals (i.e. IBNRs).
Water and Sewer Fund 1. Perform a predictive test of revenues using authorized rates and volume
statistics
2. Compare ratios of receivables to revenues for current and prior years.
3. Review adequacy of reserve for bad debts.
4. Based on results of the above tests, consider need for detail testing or
confirmation of receivables.
5. Testing of construction p: or, acts.
ARTHUR ANDERSEN
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' CITY OF FAYETTEVILLE
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IPartial List of Procedures (cont'd.)
CyclelFund Procedures
General Long -Term Debt Group 1. Confirm maturity schedules on new debt with the paying agent.
of Accounts 2. Confirm all bonds with the paying agent as to principal and interest paid
and balances outstanding.
General Fixed Assets Group of 1. Vouch property additions on a test basis.
Accounts 2. Test procedures for recording of fixed assets.
3. Verify proper accounting for retirements or other dispositions.
Treasury Cycle (Overall) 1. Confirm yearend cash balances in all bank accounts.
2. Obtain bank cutoff statements and use these to test bank reconciliations.
3. Confirm securities and collateral held in safekeeping by the financial
'
institution.
4. Test compliance with the City's existing investment policy.
5. Test computation of accrued interest and allocation of interest revenue
between funds.
6. Test interest revenue by computing average monthly interest rates.
7. Review analysis of interfund accounts and analysis of interfund transfer
activity.
Purchasing Cycle (Overall) 1. Test cash disbursements procedures by examining a sample of purchase
orders, canceled checks and voucher packages.
2. Test accounts payable by vouching subsequent payment of material
amounts.
3. Review activity subsequent to yearend to assess the need for additional
accrual of unrecorded liabilities.
4. Test contract compliance and bidding procedures by examining a sample
of payments to contractors.
Payroll Cycle (Overall) 1. Test calculation and support for payroll disbursements using a sample of
disbursements.
2. Test reasonableness of payroll expenditures by computing monthly
average budgeted expenditures and comparing to actual monthly
amounts.
3. Recompute payroll accrual on a test basis.
4. Review provisions of retirement plans and determine adequacy of
financial statement disclosures.
ARTHUR ANDERSEN
PAGE57
CITY OF FAYETTEVILLE
II
I • AA
Partial List of Procedures (cont'd.)
Cycle/Fun d Procedures
Other Overall Procedures 1. Review minutes of City Council meetings from January 1 through audit
report date.
2. Compare actual rev enues and expenditures in all funds to applicable
budget amounts. Obtain explanations for large or unusua: variations and
deternir.e that the City took appropriate action on overruns,
3. Perform a review of EDP systems and inter al controls
Single Audit Approach to Grant Audits
Our Single Audit approach at the City would consist of the following:
• Compliance testing of payroll and nnnpavroL disbu-•sementc or. a statistical basis.
• Review of indirect cost rate.
• Identification of "ma}or" programs of the ('itv
• Study and evaluation of internal controk over "major'. programs
• Review of genera: compliance requirements.
• Specific compliance testing for all "major" programs.
• Confirmation of significant grants by applicable grantor agencies.
• Reconciliation of amounts included in Schedule of Federal and Stale Financial Assistance to the amounts
reflected in the special revenue fund.
• Analytical review of individual grant trial balances.
• Review of program income.
• Review of and test for compliance with grant matching requirements.
• Review of grant financial statements.
• Preparation of compliance and internal control repots.
ARTHUR ANDERSEN
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Honorable Mayor, Members of the City Council
City of Fayetteville, Arkansas
We have audited the accompanying general purpose financial statements of
the City of Fayetteville, Arkansas (the "City"), as of and for the year ended
September 30,1993, as listed in the Table of Contents. These general purpose
financial statements and the schedules referred to below are the responsibility
of the City's management. Our responsibility is to express an opinion on
these general purpose financial statements and schedules based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the general purpose financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
general purpose financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall general purpose financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion
In our opinion, the general purpose financial statements referred to above,
present fairly, in all material respects, the financial position of the City as of
September 30,1993, and the results of its operations and cash flows of its
proprietary fund types for the year then ended in conformity with generally
accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the general
purpose financial statements taken as a whole. The combining, individual
fund and individual account group financial statements and schedules listed
in the accompanying Table of Contents are presented for purposes of
additional analysis and are not a required part of the general purpose
financial statements of the City. Such information has been subjected to the
auditing procedures applied in the audit of the general purpose financial
statements and, in our opinion, is fairly stated in all material respects, in
relation to the general purpose financial statements taken as a whole.
The information included in the Statistical Section of this report have been
summarized from the City's records and were not subjected to the auditing
procedures applied in our audit of the general purpose financial statements,
and accordingly, we express no opinion on such information.
ARTHUR ANDERSEN
Appendix ll-
Report Format -
Auditor's Report for
the Comprehensive
Annual Financial
Report
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PAce59
CITY OF FAYETTEVILLE
Appendix III This page is designed to provide an easy cross-reference from the City's RFP '
Cross -Reference to to our detailed proposal.
Page(s) RIP Qualification
the RFP 1-12 A. Qualifications of the firm and its coordinating office in
performing Governmental audits.
1-11 1. Describe the firm's strengths. audit philosophy and strategy
for the future.
1, 3 - 4 2. Describe the firm's clientele.
10 3. Describe what positions have been taken by the firm with
the AICPA, FASB or GASB winch could be viewed as
controversial.
11 4. List any members of the firm which are nationally
recognized professionals in public finance or government
accounting, such as members of the executive boards of
committees of the GFOA or GASH.
12 5. Describe the firm's affirmative action plan and how
minorities are placed in the firm.
13-30 B. Experience, Competence, and Capacity for Performance of
the fine and its coordinating office in Governmental audits.
1. Qualifications of the Coordinating Office:
13 a. State whether the office is part of a national, regional or
local accounting firm.
13 b. List the number of partners, managers, supervisors and
staff located in the coordinating office in the audit, tax,
and management consulting divisions.
18-19 c. Describe the extent of statistical and computer assisted
audit techniques used in governmental audits including
the use of microcomputers to generate work papers.
20 d. Describe the organization of the audit staff.
2. Availability and qualifications of the assigned individuals:
21-28
a. List the partners, managers and supervisors who will be
assigned to the engagement Please provide specific
qualifications of these individuals in municipal
accounting and auditing. On your list, include education,
position in the him and years and types of experience.
ARTim-R ANDERSEN
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CITY OF FAYETTEVILLE
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Page(s) RFP Qualification Appendix III
21-28 b. Describe specialized skills, training or background in Cross -Reference fo
' public finance and governmental accounting of the DY
assigned individual staff members. Indicate which of the RFP
' assigned staff members have completed, within the last
two years, at least 80 credit hours of continuing education
and training that contributes directly to the auditor's
professional proficiency to perform the audit, including
specifics on training in the governmental accounting and
auditing field.
13,29 c. Address the availability of staff members both during the
audit and throughout the year for consultation. Include
an explanation of the plan your firm has to commit the
necessary resources to ensure completion of the audit
work by the due dates.
' 30 3. Description of the firm's internal quality control procedures:
14 a. Outline the levels of review to which work papers are
' subjected.
30 b. Describe any disciplinary action imposed by the AICPA,
State Boards of Public Accountancy, State Societies of
CPAs, or Securities and Exchange Commission during
the past three years indicating any involvement of the
• ' coordinating office.
30 c. Describe results of recent peer review and its status
under the Peer Review Program.
31-51 C. Proposed method of performing audit
34, 37 1. Describe how the firm's overall philosophy applies to this
particular engagement.
37-41,49
2. Describethe audit planin general and specify areas that in
Appendix I
your opinion may require particular audit emphasis.
32,41 - 47
3. Explain the firm's understanding of the audit work that is to
Appendix I
be performed for the City of Fayetteville.
33
4. Describe in detail the type of personnel assistance that the
City would be expected to provide and how this would be
coordinated by the auditors with the City management.
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CITY OF PAYETTEYILLE
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ApWdix II! Page(s) RFP Qualification
Cross -Reference to 33 5. Indicate in detail computer expertise which would be
expected from City staff or other resources expected in order
the RFP
to comp:etc the control reviews
52-54 D. Past performance of the firm and it coordinating office in
Governmental audits,
52 - 53 :. list local government clients or other clients which are felt to
be re evant to this RFT which are currently or have been
sen•ed by the firm and the coordinating office, indicating
those having a Certificate of Achievement for Excellence in
Finandal Reporting awarded by GFOA.
53 2 Prcvide names and telephone numbers of appropriate
officials for reference purposes.
E. Price Proposal.
1- 4 .. Basis for fee and not -to -exceed cost shall be submitted to the
Purchasing Officer in the sealed proposa: envelope. This
proposa: should include a schedu a for each of the four years
in the' following format:
2 a. Billing rates per class of employee
2 h. Estimated number of hours per class of employee
1 c. Maximum not to exceed cost per year
3-4 d. Any special provisions winch would affect the proposed
fees
ARTHUR ANDERSEN '
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